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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Liberty Oilfield Services Inc. (NYSE:LBRT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
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The Last 12 Months Of Insider Transactions At Liberty Oilfield Services
The CFO & Treasurer, Michael Stock, made the biggest insider sale in the last 12 months. That single transaction was for US$1.5m worth of shares at a price of US$17.01 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$13.53. So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Michael Stock.
Michael Stock ditched 164k shares over the year. The average price per share was US$17.01. 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!
I will like Liberty Oilfield Services better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Liberty Oilfield Services Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Liberty Oilfield Services insiders own 7.0% of the company, worth about US$105m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.