Entercom Communications Corp. (NYSE:ETM) shareholders (or potential shareholders) will be happy to see that the Chairman Emeritus, Joseph Field, recently bought a whopping US$1.6m worth of stock, at a price of US$1.32. While that only increased their holding size by 8.6%, it is still a big swing by our standards.
Entercom Communications Insider Transactions Over The Last Year
Notably, that recent purchase by Chairman Emeritus Joseph Field was not the only time they bought Entercom Communications shares this year. They previously made an even bigger purchase of US$2.0m worth of shares at a price of US$7.00 per share. That means that an insider was happy to buy shares at above the current price of US$1.85. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Entercom Communications insiders were buying shares, but not selling. The average buy price was around US$3.11. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does Entercom Communications 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 17% of Entercom Communications shares, worth about US$43m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Entercom Communications Insiders?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Entercom Communications shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Entercom Communications you should know about.
But note: Entercom Communications 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.
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