Yahoo Finance Should You Take Comfort From Insider Transactions At Oil Search Limited (ASX:OSH)?
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Oil Search Limited (ASX:OSH).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
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 Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for Oil Search
Oil Search Insider Transactions Over The Last Year
The Independent Chairman of the Board Richard Lee made the biggest insider purchase in the last 12 months. That single transaction was for AU$114k worth of shares at a price of AU$5.70 each. That means that even when the share price was higher than AU$4.15 (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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months Oil Search insiders were buying shares, but not selling. Their average price was about AU$4.49. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Oil Search is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Oil Search
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Oil Search insiders own 0.5% of the company, worth about AU$40m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Oil Search Tell Us?
It doesn't really mean much that no insider has traded Oil Search shares in the last quarter. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Oil Search insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Oil Search has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.
But note: Oil Search may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.
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.
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