We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in AGL Energy Limited (ASX:AGL).

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 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. 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.'

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View our latest analysis for AGL Energy

AGL Energy Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Chairman Graeme Hunt for AU$246k worth of shares, at about AU$19.66 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$22.17. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices. Notably Graeme Hunt was also the biggest seller, having sold AU$79k worth of shares.

Happily, we note that in the last year insiders paid AU$393k for 20000 shares. But insiders sold 4000 shares worth AU$79k. In the last twelve months there was more buying than selling by AGL Energy insiders. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

AGL Energy 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.

Does AGL Energy 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. It appears that AGL Energy insiders own 0.1% of the company, worth about AU$15m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.