It is not uncommon to see companies perform well in the years after insiders buy shares. 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 nVent Electric plc (NYSE:NVT).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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'.
The Last 12 Months Of Insider Transactions At nVent Electric
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Chairman, Randall Hogan, sold US$2.6m worth of shares at a price of US$28.01 per share. So we know that an insider sold shares at around the present share price of US$24.91. 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.
In total, nVent Electric insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
nVent Electric Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of nVent Electric shares over the last three months. We note Randall Hogan cashed in US$2.6m worth of shares. On the flip side, Director Michael Ducker spent US$48k on purchasing shares (as mentioned above). Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Does nVent Electric Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.5% of nVent Electric shares, worth about US$20m. 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 Do The nVent Electric Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at nVent Electric, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! Of course, the future is what matters most. So if you are interested in nVent Electric, you should check out this free report on analyst forecasts for the company.
But note: nVent Electric 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.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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