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 before you buy or sell National Oilwell Varco, Inc. (NYSE:NOV), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 National Oilwell Varco
Independent Director Eric Mattson made the biggest insider sale in the last 12 months. That single transaction was for US$504k worth of shares at a price of US$45.61 each. That is hardly a positive sign, even though it took place above the latest price (US$29.78). So it may not tell us anything about how insiders feel about the current share price.
We note that in the last year insiders divested 30.33k shares for a total of US$1.3m. In total, National Oilwell Varco insiders sold more than they bought over the last year. The average sell price was around US$42.63. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of US$29.78. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Does National Oilwell Varco Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 0.3% of National Oilwell Varco shares, worth about US$29m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The National Oilwell Varco Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded National Oilwell Varco shares in the last quarter. Our analysis of National Oilwell Varco insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for National Oilwell Varco.
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 firstname.lastname@example.org.