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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Superior Drilling Products, Inc. (NYSEMKT:SDPI).
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 in the company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
Superior Drilling Products Insider Transactions Over The Last Year
In fact, the recent purchase by Reid Walker was the biggest purchase of Superior Drilling Products shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was higher than US$0.45 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. We note that Reid Walker was also the biggest seller.
In the last twelve months insiders purchased 1.15m shares for US$748k. On the other hand they divested 62414 shares, for US$31k. In the last twelve months there was more buying than selling by Superior Drilling Products insiders. 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!
Superior Drilling Products is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Superior Drilling Products Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Superior Drilling Products. In total, insider Reid Walker bought US$739k worth of shares in that time. But insider Reid Walker sold shares worth US$31k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does Superior Drilling Products Boast High Insider Ownership?
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. It appears that Superior Drilling Products insiders own 16% of the company, worth about US$1.8m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Superior Drilling Products Insiders?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Superior Drilling Products shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Superior Drilling Products. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Superior Drilling Products.
Of course Superior Drilling Products may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.