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 we'll take a look at whether insiders have been buying or selling shares in Capital Power Corporation (TSE:CPX).
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, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
Capital Power Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the President, Brian Vaasjo, for CA$2.8m worth of shares, at about CA$28.70 per share. That means that an insider was selling shares at slightly below the current price (CA$30.36). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 45% of Brian Vaasjo's holding. Notably Brian Vaasjo was also the biggest buyer, having purchased CA$631k worth of shares.
Happily, we note that in the last year insiders paid CA$631k for 22546 shares. On the other hand they divested 96971 shares, for CA$2.8m. All up, insiders sold more shares in Capital Power than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Capital Power Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Capital Power. In total, President Brian Vaasjo bought CA$298k worth of shares in that time. But Senior VP of Finance & CFO Bryan DeNeve sold shares worth CA$5.1k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does Capital Power Boast High Insider Ownership?
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. From our data, it seems that Capital Power insiders own 0.3% of the company, worth about CA$8.5m. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
What Might The Insider Transactions At Capital Power Tell Us?
The recent insider purchase is heartening. But we can't say the same for the transactions over the last 12 months. We're not thrilled with the relatively low insider ownership and the longer term transaction history. But we like the recent purchasing. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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 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.