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 we’ll take a look at whether insiders have been buying or selling shares in Unit Corporation (NYSE:UNT).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 it is perfectly logical to keep tabs on what insiders are doing. 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.’
The Last 12 Months Of Insider Transactions At Unit
Over the last year, we can see that the biggest insider sale was by Manager & President of Superior Pipeline Company LLC Robert Parks for US$621k worth of shares, at about US$27.32 per share. That is hardly a positive sign, even though it took place above the latest price (US$13.37). So it may not shed much light on insider confidence at current levels. Robert Parks was the only individual insider to sell shares in the last twelve months.
Robert Parks ditched 23.41k shares over the year. The average price per share was US$27.25. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Unit Boast High Insider Ownership?
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. Unit insiders own about US$25m worth of shares (which is 3.3% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Unit Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Our analysis of Unit insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Unit, you should check out this free report on analyst forecasts for the company.
Of course Unit may not be the best stock to buy. So you may wish to see this free collection of high quality 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.