Yahoo Finance NOW Inc.'s (NYSE:DNOW) recent US$77m market cap decline means a loss of US$2.7k for insiders who bought this year
Insiders who acquired US$104k worth of NOW Inc.'s (NYSE:DNOW) stock at an average price of US$7.44 in the past 12 months may be dismayed by the recent 8.8% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$102k which is not ideal.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for NOW
The Last 12 Months Of Insider Transactions At NOW
Notably, that recent purchase by David Cherechinsky is the biggest insider purchase of NOW shares that we've seen in the last year. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$7.25). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was David Cherechinsky.
The chart below shows insider transactions (by companies and 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!
NOW is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.0% of NOW shares, worth about US$8.1m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Do The NOW Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that NOW insiders are expecting a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing NOW. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of NOW.
But note: NOW 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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