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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Retail Opportunity Investments Corp. (NASDAQ:ROIC), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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 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'.
Retail Opportunity Investments Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Eric Zorn for US$268k worth of shares, at about US$9.22 per share. We do like to see buying, but this purchase was made at well below the current price of US$13.52. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Retail Opportunity Investments is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Retail Opportunity Investments insiders own 2.4% of the company, worth about US$41m. 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 Retail Opportunity Investments Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Retail Opportunity Investments shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Retail Opportunity Investments and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Retail Opportunity Investments. Every company has risks, and we've spotted 2 warning signs for Retail Opportunity Investments (of which 1 doesn't sit too well with us!) you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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. 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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