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 Cabot Oil & Gas Corporation (NYSE:COG), 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, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. 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.'
Cabot Oil & Gas Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Senior Vice President of Marketing, Jeffrey Hutton, sold US$3.9m worth of shares at a price of US$26.38 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$16.75). So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Jeffrey Hutton.
Happily, we note that in the last year insiders paid US$501k for 29054 shares. On the other hand they divested 151k shares, for US$3.9m. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Cabot Oil & Gas Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Cabot Oil & Gas. Not only was there no selling that we can see, but they collectively bought US$500k worth of shares. That shows some optimism about the company's future.
Does Cabot Oil & Gas Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Cabot Oil & Gas insiders own 1.8% of the company, currently worth about US$127m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Cabot Oil & Gas Insider Transactions Indicate?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Cabot Oil & Gas insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in Cabot Oil & Gas, you should check out this free report on analyst forecasts for the company.
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 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. Thank you for reading.