It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Black Hills Corporation (NYSE:BKH), you may well want to know whether insiders have been buying or selling.
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 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’.
View our latest analysis for Black Hills
The Last 12 Months Of Insider Transactions At Black Hills
In the last twelve months, the biggest single purchase by an insider was when Independent Chairman Steven Mills bought US$273k worth of shares at a price of US$54.65 per share. So it’s clear an insider wanted to buy, at around the current price, which is US$62.55. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. The good news for Black Hills share holders is that insiders were buying at near the current price.
While Black Hills insiders bought shares during the last year, they didn’t sell. You can see the insider transactions (by companies and 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!
Black Hills is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Black Hills
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Black Hills insiders own about US$31m worth of shares. That equates to 0.8% of the company. 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 Black Hills Tell Us?
It doesn’t really mean much that no insider has traded Black Hills shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Black Hills and their transactions don’t cause us concern. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Black Hills. You’d be interested to know, that we found 1 warning sign for Black Hills and we suggest you have a look.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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