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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 shareholders might well want to know whether insiders have been buying or selling shares in Renewable Energy Group, Inc. (NASDAQ:REGI).
Do Insider Transactions Matter?
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, 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. 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.'
Renewable Energy Group Insider Transactions Over The Last Year
The Vice President of Corporate Business Development & Legal Affairs, Eric Bowen, made the biggest insider sale in the last 12 months. That single transaction was for US$549k worth of shares at a price of US$27.45 each. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. The good news is that this large sale was at well above current price of US$15.95. So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid US$301k for 15750 shares. On the other hand they divested 111k shares, for US$2.5m. Over the last year we saw more insider selling of Renewable Energy Group shares, than buying. The average sell price was around US$22.26. We are not joyful about insider selling. But we note that the selling, on average, was at well above the recently traded price of US$15.95. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Renewable Energy 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 Renewable Energy Group Have Sold Stock Recently
We've seen more insider selling than insider buying at Renewable Energy Group recently. We note insiders cashed in US$675k worth of shares. Meanwhile insiders bought US$141k worth. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.
Insider Ownership of Renewable Energy Group
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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Renewable Energy Group insiders own 2.4% of the company, worth about US$14m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Renewable Energy Group Insiders?
The insider sales have outweighed the insider buying, at Renewable Energy Group, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We'd think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Renewable Energy Group.
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 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.