We often see insiders buying up shares in companies that perform well over the long term. 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 Southwestern Energy Company (NYSE:SWN).
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 in the company. However, rules govern insider transactions, and certain disclosures are required.
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.'
The Last 12 Months Of Insider Transactions At Southwestern Energy
In the last twelve months, the biggest single sale by an insider was when the Senior Vice President of Administration, Jennifer McCauley, sold US$64k worth of shares at a price of US$5.88 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$1.94. So it may not shed much light on insider confidence at current levels. Jennifer McCauley was the only individual insider to sell shares in the last twelve months.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Southwestern Energy
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Southwestern Energy insiders own about US$5.5m worth of shares (which is 0.5% of the company). We do generally prefer see higher levels of insider ownership.
So What Do The Southwestern Energy Insider Transactions Indicate?
The fact that there have been no Southwestern Energy insider transactions recently certainly doesn't bother us. Our analysis of Southwestern Energy insider transactions leaves us unenthusiastic. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. Of course, the future is what matters most. So if you are interested in Southwestern Energy, you should check out this free report on analyst forecasts for the company.
Of course Southwestern Energy may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.