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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 Plug Power Inc. (NASDAQ:PLUG), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
Plug Power Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman George McNamee for US$234k worth of shares, at about US$2.34 per share. That implies that an insider found the current price of US$2.46 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Plug Power insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 112k shares worth US$264k. On the other hand they divested 31343 shares, for US$54k. In the last twelve months there was more buying than selling by Plug Power insiders. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Plug Power is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Plug Power Have Bought Stock Recently
It's good to see that Plug Power insiders have made notable investments in the company's shares. In total, insiders bought US$264k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Plug Power insiders own about US$7.5m worth of shares (which is 1.3% of the company). Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Plug Power Tell Us?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Plug Power insiders are reasonably well aligned, and optimistic for the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Plug Power.
But note: Plug Power may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.