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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Southwest Gas Holdings, Inc. (NYSE:SWX), you may well want to know whether insiders have been buying or selling.
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 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 Southwest Gas Holdings
Over the last year, we can see that the biggest insider purchase was by Senior Vice President of Operations - Southwest Gas Corporation Eric DeBonis for US$165k worth of shares, at about US$82.67 per share. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders paid US$265k for 3.33k shares. But they sold 8.79k for US$687k. All up, insiders sold more shares in Southwest Gas Holdings than they bought, over the last year. They sold for an average price of about US$78.15. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Southwest Gas Holdings Insiders Are Selling The Stock
Over the last three months, we've seen notably more insider selling, than insider buying, at Southwest Gas Holdings. In that time, insiders dumped US$259k worth of shares. On the other hand we note insiders bought US$192k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Southwest Gas Holdings insiders own 0.8% of the company, worth about US$34m. 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 Do The Southwest Gas Holdings Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Southwest Gas Holdings stock, than buying, 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. So we'd only buy after careful consideration. Of course, the future is what matters most. So if you are interested in Southwest Gas Holdings, you should check out this free report on analyst forecasts for the company.
Of course Southwest Gas Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.