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 Diamondback Energy, Inc. (NASDAQ:FANG).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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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Diamondback Energy Insider Transactions Over The Last Year
The , Paul Molnar, made the biggest insider sale in the last 12 months. That single transaction was for US$638k worth of shares at a price of US$128 each. So what is clear is that an insider saw fit to sell at around the current price of US$109. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
We note that in the last year insiders divested 20554 shares for a total of US$2.5m. Diamondback Energy insiders didn't buy any shares 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!
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 Diamondback Energy Have Sold Stock Recently
The last quarter saw substantial insider selling of Diamondback Energy shares. Specifically, insiders ditched US$626k 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.
Does Diamondback Energy 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Diamondback Energy insiders own about US$69m worth of shares. That equates to 0.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Diamondback Energy Tell Us?
Insiders haven't bought Diamondback Energy stock in the last three months, but there was some selling. And even if we look to the last year, we didn't see any purchases. But it is good to see that Diamondback Energy is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Diamondback Energy.
But note: Diamondback Energy 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.
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.