We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Preferred Apartment Communities, Inc. (NYSE:APTS).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. 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.
Preferred Apartment Communities Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Gary Coursey, for US$81k worth of shares, at about US$14.31 per share. That means that even when the share price was slightly below the current price of US$14.52, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 10% of Gary Coursey's stake.
Over the last year, we note insiders sold 7498 shares worth US$108k. Preferred Apartment Communities insiders didn't buy any shares over the last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Preferred Apartment Communities Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Preferred Apartment Communities. Specifically, Independent Director Gary Coursey ditched US$81k 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. We usually like to see fairly high levels of insider ownership. Insiders own 1.0% of Preferred Apartment Communities shares, worth about US$6.3m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Preferred Apartment Communities Insider Transactions Indicate?
An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. As the saying goes, only fools rush in. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Preferred Apartment Communities.
Of course Preferred Apartment Communities may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.