Heritage Insurance Holdings, Inc. (NYSE:HRTG) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 14%, resulting in a US$15m rise in the company's market capitalisation. As a result, the stock they originally bought for US$1.2m is now worth US$4.1m.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Over the last year, we can see that the biggest insider purchase was by insider Raymond Hyer for US$397k worth of shares, at about US$1.96 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$5.13. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
While Heritage Insurance Holdings insiders bought shares during the last year, they didn't sell. They paid about US$1.54 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Heritage Insurance Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Heritage Insurance Holdings insiders own about US$38m worth of shares. That equates to 31% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
The fact that there have been no Heritage Insurance Holdings insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Heritage Insurance Holdings and their transactions don't cause us concern. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for Heritage Insurance Holdings.
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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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.