Are Insiders Buying HC2 Holdings, Inc. (NYSE:HCHC) Stock?
We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in HC2 Holdings, Inc. (NYSE:HCHC).
What Is Insider Buying?
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, most countries require that the company discloses such transactions to the market.
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 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'.
Check out our latest analysis for HC2 Holdings
The Last 12 Months Of Insider Transactions At HC2 Holdings
The Independent Chairman of the Board Avram Glazer made the biggest insider purchase in the last 12 months. That single transaction was for US$9.0m worth of shares at a price of US$3.54 each. We do like to see buying, but this purchase was made at well below the current price of US$4.30. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
In the last twelve months insiders purchased 6.19m shares for US$22m. But they sold 141.32k shares for US$370k. In total, HC2 Holdings insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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HC2 Holdings Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at HC2 Holdings, over the last three months. Insiders spent US$8.3m on shares. But insiders only sold shares worth US$96k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. HC2 Holdings insiders own about US$131m worth of shares (which is 39% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The HC2 Holdings Insider Transactions Indicate?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest HC2 Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 1 warning sign for HC2 Holdings you should know about.
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.
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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