We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Equity Commonwealth (NYSE:EQC).
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, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
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The Last 12 Months Of Insider Transactions At Equity Commonwealth
Over the last year, we can see that the biggest insider sale was by the Executive VP, Adam Markman, for US$400k worth of shares, at about US$31.96 per share. That means that even when the share price was slightly below the current price of US$32.04, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 8.1% of Adam Markman's holding.
We note that in the last year insiders divested 18500 shares for a total of US$594k. Insiders in Equity Commonwealth didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Insiders at Equity Commonwealth Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Equity Commonwealth. Specifically, insiders ditched US$594k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Equity Commonwealth insiders own 1.6% of the company, worth about US$61m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Equity Commonwealth Tell Us?
Insiders haven't bought Equity Commonwealth stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Equity Commonwealth is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Equity Commonwealth.
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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 firstname.lastname@example.org. 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.