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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 shareholders might well want to know whether insiders have been buying or selling shares in Preferred Apartment Communities, Inc. (NYSE:APTS).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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.’
Preferred Apartment Communities Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Executive VP Michael Cronin for US$282k worth of shares, at about US$17.11 per share. So what is clear is that an insider saw fit to sell at around the current price of US$15.70. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
We note that in the last year insiders divested 23.76k shares for a total of US$408k. All up, insiders sold more shares in Preferred Apartment Communities than they bought, over the last year. The sellers received a price of around US$17.17, on average. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Preferred Apartment Communities 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 Preferred Apartment Communities Have Sold Stock Recently
Over the last three months, we’ve seen a bit of insider selling at Preferred Apartment Communities. Independent Director William Gresham divested only US$27k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn’t enough for us to put any weight on it.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Preferred Apartment Communities insiders own about US$6.5m worth of shares (which is 1.0% of the company). Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
What Might The Insider Transactions At Preferred Apartment Communities Tell Us?
Insider selling has just outweighed insider buying in the last three months. But the difference is small, and thus, not concerning. We’re a little cautious about the insider selling at Preferred Apartment Communities. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. 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.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.