Did American Water Works Company, Inc. (NYSE:AWK) Insiders Buy Up More Shares?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in American Water Works Company, Inc. (NYSE:AWK).

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 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’.

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American Water Works Company Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman Karl Kurz bought US$91k worth of shares at a price of US$91.30 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices.

Happily, we note that in the last year insiders bought 1.10k shares for a total of US$100k. In total, American Water Works Company insiders bought more than they sold over the last year. They paid about US$91.35 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$90.43. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders at American Water Works Company Have Bought Stock Recently

Over the last quarter, American Water Works Company insiders have spent a meaningful amount on shares. Overall, 2 insiders shelled out US$100k for shares in the company — and none sold. That shows some optimism about the company’s future.

Insider Ownership of American Water Works Company

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 American Water Works Company insiders own 0.2% of the company, worth about US$36m. 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 Does This Data Suggest About American Water Works Company Insiders?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in American Water Works Company shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in American Water Works Company, you should check out this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.