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 shareholders might well want to know whether insiders have been buying or selling shares in Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).
What Is Insider Buying?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Sinclair Broadcast Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Executive Chairman of the Board, David Smith, sold US$22m worth of shares at a price of US$61.18 per share. That means that an insider was selling shares at around the current price of US$55.89. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Notably David Smith was also the biggest buyer, having purchased US$22m worth of shares.
In total, Sinclair Broadcast Group insiders sold more than they bought over the last year. You can see the insider transactions (by 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!
I will like Sinclair Broadcast Group 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 Sinclair Broadcast Group Have Sold Stock Recently
There was substantially more insider selling, than buying, of Sinclair Broadcast Group shares over the last three months. In that time, insiders dumped US$23m worth of shares. Meanwhile Executive Chairman of the Board David Smith bought US$22m worth, as we said above. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Does Sinclair Broadcast Group 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. We usually like to see fairly high levels of insider ownership. It's great to see that Sinclair Broadcast Group insiders own 30% of the company, worth about US$1.5b. 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 Do The Sinclair Broadcast Group Insider Transactions Indicate?
The stark truth for Sinclair Broadcast Group is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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.
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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.