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 Peyto Exploration & Development Corp. (TSE:PEY), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Peyto Exploration & Development
Vice President of Drilling & Completions Lee Curran made the biggest insider purchase in the last 12 months. That single transaction was for CA$241k worth of shares at a price of CA$3.21 each. That means that even when the share price was higher than CA$2.31 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders purchased 197.00k shares for CA$702k. But insiders sold 177205 shares worth CA$652k. In total, Peyto Exploration & Development insiders bought more than they sold over the last year. They paid about CA$3.56 on average. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Peyto Exploration & Development Boast High 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. We usually like to see fairly high levels of insider ownership. Insiders own 2.5% of Peyto Exploration & Development shares, worth about CA$9.5m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Do The Peyto Exploration & Development Insider Transactions Indicate?
The fact that there have been no Peyto Exploration & Development insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Peyto Exploration & Development insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Peyto Exploration & Development. For example, Peyto Exploration & Development has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.
Of course Peyto Exploration & Development 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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