It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Carnival Corporation & Plc (NYSE:CCL).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Carnival & Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Group Chief Executive Officer of Holland America Group & Carnival UK, Stein Kruse, for US$1.8m worth of shares, at about US$57.08 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$44.08). So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid US$2.9m for 63645 shares. But insiders sold 71792 shares worth US$4.1m. In total, Carnival & insiders sold more than they bought over the last year. 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!
I will like Carnival & better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Carnival & Have Bought Stock Recently
It's good to see that Carnival & insiders have made notable investments in the company's shares. Overall, two insiders shelled out US$1.9m for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.
Does Carnival & Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Carnival & insiders own 16% of the company, currently worth about US$3.3b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Carnival & Insiders?
It is good to see recent purchasing. But we can't say the same for the transactions over the last 12 months. The high levels of insider ownership, and the recent buying by some insiders, suggests they are well aligned and optimistic. Of course, the future is what matters most. So if you are interested in Carnival &, you should check out this free report on analyst forecasts for the company.
But note: Carnival & may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.