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Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) Insiders Increased Their Holdings

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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 Sinclair Broadcast Group, Inc. (NASDAQ:SBGI).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Sinclair Broadcast Group

Sinclair Broadcast Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when VP & Director Frederick Smith bought US$8.6m worth of shares at a price of US$28.72 per share. That implies that an insider found the current price of US$31.25 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Sinclair Broadcast Group share holders is that insiders were buying at near the current price.

In the last twelve months insiders purchased 606.70k shares for US$13m. But insiders sold 47.64k shares worth US$1.2m. In total, Sinclair Broadcast Group insiders bought more than they sold over the last year. The average buy price was around US$21.04. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and 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!

insider-trading-volume
insider-trading-volume

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Sinclair Broadcast Group Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Sinclair Broadcast Group. VP & Director Frederick Smith spent US$8.6m on stock. On the other hand, insiders netted US$1.2m by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Sinclair Broadcast Group Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Sinclair Broadcast Group insiders own 38% of the company, worth about US$873m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Sinclair Broadcast Group Insiders?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Sinclair Broadcast Group. Looks promising! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 3 warning signs for Sinclair Broadcast Group (of which 1 shouldn't be ignored!) you should know about.

Of course Sinclair Broadcast Group 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.