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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Echo Global Logistics, Inc. (NASDAQ:ECHO), 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 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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Echo Global Logistics Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when President & COO David Menzel sold US$683k worth of shares at a price of US$34.13 per share. Although we don't gain confidence from insider selling, we note that this large sale was at well above current price of US$25.14. So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders netted US$1.3m for 40.50k shares sold. All up, insiders sold more shares in Echo Global Logistics than they bought, over the last year. The average sell price was around US$32.13. Insider selling doesn't make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of US$25.14. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Echo Global Logistics better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Echo Global Logistics Boast High Insider Ownership?
Many investors like to check how much of a company is owned by 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. Insiders own 2.7% of Echo Global Logistics shares, worth about US$19m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Echo Global Logistics Tell Us?
The fact that there have been no Echo Global Logistics insider transactions recently certainly doesn't bother us. Our analysis of Echo Global Logistics insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.