It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Precision Drilling Corporation (TSE:PD).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
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The Last 12 Months Of Insider Transactions At Precision Drilling
In the last twelve months, the biggest single purchase by an insider was when President Kevin Neveu bought CA$268k worth of shares at a price of CA$2.68 per share. That means that an insider was happy to buy shares at around the current price of CA$2.76. 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 Precision Drilling insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 489k shares worth CA$1.3m. But insiders sold 3500 shares worth CA$12k. In total, Precision Drilling insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own CA$5.9m worth of Precision Drilling stock, about 0.7% of the company. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At Precision Drilling Tell Us?
It doesn't really mean much that no insider has traded Precision Drilling shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Precision Drilling stock. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Precision Drilling.
But note: Precision Drilling 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.