Possible bearish signals as The Southern Company (NYSE:SO) insiders disposed of US$765k worth of stock
Over the past year, many The Southern Company (NYSE:SO) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
View our latest analysis for Southern
Southern Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chief Accounting Officer & Comptroller, Ann Daiss, sold US$506k worth of shares at a price of US$67.47 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$67.72. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 29% of Ann Daiss's stake.
Insiders in Southern didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Southern Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Southern. In total, Chief Information Officer & Executive VP Martin Davis sold US$201k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of Southern
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. It's great to see that Southern insiders own 0.2% of the company, worth about US$165m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Southern Insiders?
An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that Southern is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Southern. Every company has risks, and we've spotted 4 warning signs for Southern (of which 1 doesn't sit too well with us!) you should know about.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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