Enphase Energy, Inc.’s (NASDAQ:ENPH) value has fallen 9.1% in the last week, but insiders who sold US$61m worth of stock over the last year have had less success. Given that the average selling price of US$206 is still lower than the current share price, insiders would probably have been better off keeping their shares.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Enphase Energy
Over the last year, we can see that the biggest insider sale was by the Independent Director, Benjamin Kortlang, for US$13m worth of shares, at about US$270 per share. That means that an insider was selling shares at slightly below the current price (US$284). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. We note that the biggest single sale was only 5.8% of Benjamin Kortlang’s holding.
Insiders in Enphase Energy didn’t buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Enphase Energy better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Enphase Energy Insiders Are Selling The Stock
The last three months saw significant insider selling at Enphase Energy. Specifically, insiders ditched US$24m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Enphase Energy insiders own 2.5% of the company, currently worth about US$974m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Enphase Energy Tell Us?
Insiders sold Enphase Energy shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Enphase Energy makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about 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. In terms of investment risks, we’ve identified 2 warning signs with Enphase Energy and understanding them should be part of your investment process.
Of course Enphase Energy may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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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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