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 before you buy or sell Penn National Gaming, Inc. (NASDAQ:PENN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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’.
The Last 12 Months Of Insider Transactions At Penn National Gaming
In the last twelve months, the biggest single purchase by an insider was when CEO, President & Director Jay Snowden bought US$500k worth of shares at a price of US$18.00 per share. Even though the purchase was made at a significantly lower price than the recent price (US$64.70), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
Over the last year, we can see that insiders have bought 59.33k shares worth US$1.1m. On the other hand they divested 5.00k shares, for US$227k. In total, Penn National Gaming insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Penn National Gaming is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Penn National Gaming Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Penn National Gaming shares. In total, Independent Lead Director Barbara Shattuck Kohn dumped US$227k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Does Penn National Gaming Boast High 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. Penn National Gaming insiders own about US$454m worth of shares (which is 4.2% of the company). 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 Penn National Gaming Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. In contrast, they appear keener if you look at the last twelve months. On top of that, insiders own a significant portion of the company. So we’re happy to look past recent trading. 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 – Penn National Gaming has 3 warning signs we think you should be aware of.
But note: Penn National Gaming may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.