We often see insiders buying up shares in companies that perform well over the long term. 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 Southwestern Energy Company (NYSE:SWN).
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, 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 Colombia 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 Southwestern Energy
Over the last year, we can see that the biggest insider sale was by Senior Vice President of Administration Jennifer McCauley for US$64k worth of shares, at about US$5.88 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$3.25. So it is hard to draw any strong conclusion from it. Jennifer McCauley was the only individual insider to sell over the last year.
The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Southwestern Energy insiders own about US$12m worth of shares (which is 0.6% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Southwestern Energy 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. But it is good to see that Southwestern Energy is growing earnings. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! 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.
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 email@example.com.