It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Service Properties Trust (NASDAQ:SVC).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
Service Properties Trust Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Trustee, John Harrington, sold US$339k worth of shares at a price of US$12.75 per share. So we know that an insider sold shares at around the present share price of US$12.59. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive). John Harrington was the only individual insider to sell over the last year.
John Harrington divested 42.76k shares over the last 12 months at an average price of US$12.65. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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).
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our data indicates that Service Properties Trust insiders own about US$6.4m worth of shares (which is 0.3% of the company). Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Does This Data Suggest About Service Properties Trust Insiders?
The fact that there have been no Service Properties Trust insider transactions recently certainly doesn’t bother us. We don’t take much encouragement from the transactions by Service Properties Trust insiders. And we’re not picking up on high enough insider ownership to give us any comfort. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. For example – Service Properties Trust has 1 warning sign we think you should be aware of.
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.
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