We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Public Service Enterprise Group Incorporated (NYSE:PEG).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 equally, we would consider it foolish to ignore insider transactions altogether. 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'.
The Last 12 Months Of Insider Transactions At Public Service Enterprise Group
Over the last year, we can see that the biggest insider sale was by the President & COO of PSEG Company, Ralph LaRossa, for US$1.4m worth of shares, at about US$55.57 per share. That means that even when the share price was below the current price of US$59.77, 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 25% of Ralph LaRossa's holding.
In total, Public Service Enterprise Group insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Public Service Enterprise Group Insiders Are Selling The Stock
The last three months saw significant insider selling at Public Service Enterprise Group. In total, Chairman Ralph Izzo dumped US$2.2m 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.
Does Public Service Enterprise Group Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Public Service Enterprise Group insiders own 0.2% of the company, worth about US$51m. 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 Public Service Enterprise Group Insider Transactions Indicate?
An insider hasn't bought Public Service Enterprise Group stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. 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 Public Service Enterprise Group.
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For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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