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Should You Be Worried About Insider Transactions At Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI)?

Simply Wall St

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.'

Check out our latest analysis for Hannon Armstrong Sustainable Infrastructure Capital

The Last 12 Months Of Insider Transactions At Hannon Armstrong Sustainable Infrastructure Capital

The Executive VP & Head of Portfolio Management Group, Daniel McMahon, made the biggest insider sale in the last 12 months. That single transaction was for US$457k worth of shares at a price of US$22.84 each. That means that an insider was selling shares at slightly below the current price (US$27.63). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 8.5% of Daniel McMahon's holding.

Over the last year, we can see that insiders have bought 9755 shares worth US$237k. But insiders sold 43952 shares worth US$1.1m. In total, Hannon Armstrong Sustainable Infrastructure Capital insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:HASI Recent Insider Trading, September 3rd 2019

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Insiders at Hannon Armstrong Sustainable Infrastructure Capital Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Hannon Armstrong Sustainable Infrastructure Capital. We note insiders cashed in US$380k worth of shares. On the flip side, Chairman Jeffrey Eckel spent US$51k on purchasing shares. Generally this level of net selling might be considered a bit bearish.

Insider Ownership

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 Hannon Armstrong Sustainable Infrastructure Capital insiders own 3.5% of the company, worth about US$63m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Hannon Armstrong Sustainable Infrastructure Capital Insider Transactions Indicate?

The stark truth for Hannon Armstrong Sustainable Infrastructure Capital is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Hannon Armstrong Sustainable Infrastructure Capital makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. 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.

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. We currently account for open market transactions and private dispositions, but not derivative transactions.

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 editorial-team@simplywallst.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.