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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Apollo Commercial Real Estate Finance
Over the last year, we can see that the biggest insider sale was by Director Scott Prince for US$581k worth of shares, at about US$19.38 per share. So what is clear is that an insider saw fit to sell at around the current price of US$18.40. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
Over the last year, we note insiders sold 93.00k shares worth US$1.8m. Over the last year we saw more insider selling of Apollo Commercial Real Estate Finance shares, than buying. The average sell price was around US$18.88. It’s not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Apollo Commercial Real Estate Finance Have Sold Stock Recently
The last three months saw significant insider selling at Apollo Commercial Real Estate Finance. Specifically, insiders ditched US$374k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of Apollo Commercial Real Estate Finance
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.4% of Apollo Commercial Real Estate Finance shares, worth about US$9.8m, according to our data. But they may have an indirect interest through a corporate structure that we haven’t picked up on. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Apollo Commercial Real Estate Finance Insiders?
Insiders sold Apollo Commercial Real Estate Finance shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited about the stock. We’d certainly think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.