It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Pacific Ethanol, Inc. (NASDAQ:PEIX), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Pacific Ethanol Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Founder Neil Koehler bought US$96k worth of shares at a price of US$3.20 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices.
In the last twelve months insiders paid US$172k for 52.00k shares purchased. In total, Pacific Ethanol insiders bought more than they sold over the last year. Their average price was about US$3.31. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$1.14. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Pacific Ethanol better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Pacific Ethanol Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From looking at our data, insiders own US$2.1m worth of Pacific Ethanol stock, about 4.0% of the company. We consider this fairly low insider ownership.
So What Do The Pacific Ethanol Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Pacific Ethanol stock. Of course, the future is what matters most. So if you are interested in Pacific Ethanol, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.