We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in Xcel Energy Inc. (NASDAQ:XEL).
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, 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 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'.
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Xcel Energy Insider Transactions Over The Last Year
The Chairman, Benjamin G. Fowke, made the biggest insider sale in the last 12 months. That single transaction was for US$4.1m worth of shares at a price of US$55.13 each. That means that even when the share price was below the current price of US$58.21, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 10.2% of Benjamin G. Fowke's holding.
In total, Xcel Energy insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Xcel Energy better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Xcel Energy Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Xcel Energy. Specifically, insiders ditched US$5.1m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Xcel Energy insiders own 0.3% of the company, worth about US$79m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Xcel Energy Insiders?
Insiders haven't bought Xcel Energy stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Xcel Energy is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! Of course, the future is what matters most. So if you are interested in Xcel Energy, 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.
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.
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.