Insiders' US$908.5k Investments In Red Following Arbor Realty Trust's €207m Dip In Market Value
The recent price decline of 41% in Arbor Realty Trust, Inc.'s (FRA:OWQ) stock may have disappointed insiders who bought US$908.5k worth of shares at an average price of US$6.19 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$227.4k, which is not great.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Arbor Realty Trust
Over the last year, we can see that the biggest insider purchase was by Chairman Ivan Kaufman for €405k worth of shares, at about €7.85 per share. That means that even when the share price was higher than €1.55 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Over the last year, we can see that insiders have bought 146.74k shares worth €908k. On the other hand they divested 34.39k shares, for €173k. In the last twelve months there was more buying than selling by Arbor Realty Trust insiders. Their average price was about €6.19. 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 companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Check out our latest analysis for Arbor Realty Trust
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders At Arbor Realty Trust Have Bought Stock Recently
Over the last quarter, Arbor Realty Trust insiders have spent a meaningful amount on shares. Specifically, Lead Independent Director William Green bought €113k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Insider Ownership Of Arbor Realty Trust
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 2.9% of Arbor Realty Trust shares, worth about €10m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Arbor Realty Trust Tell Us?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Arbor Realty Trust we think they are probably pretty confident of a bright future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 3 warning signs with Arbor Realty Trust and understanding these should be part of your investment process.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.
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