Should You Take Comfort From Insider Transactions At Continental Resources, Inc. (NYSE:CLR)?
We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Continental Resources, Inc. (NYSE:CLR), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
See our latest analysis for Continental Resources
Continental Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Founder & Executive Chairman, Harold Hamm, sold US$60m worth of shares at a price of US$34.17 per share. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. It’s of some comfort that this sale was conducted at a price well above the current share price, which is US$12.73. So it may not tell us anything about how insiders feel about the current share price. Notably Harold Hamm was also the biggest buyer, having purchased US$130m worth of shares.
Happily, we note that in the last year insiders paid US$130m for 7.78m shares. On the other hand they divested 1.81m shares, for US$61m. In total, Continental Resources insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. 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.
Insiders at Continental Resources Have Bought Stock Recently
Over the last quarter, Continental Resources insiders have spent a meaningful amount on shares. We can see that Founder & Executive Chairman Harold Hamm paid US$48m for shares in the company. No-one sold. This makes one think the business has some good points.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company 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. Continental Resources insiders own 84% of the company, currently worth about US$3.8b 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 Continental Resources Tell Us?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But we don’t feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Continental Resources. Nice! In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Continental Resources. Every company has risks, and we’ve spotted 2 warning signs for Continental Resources (of which 1 is concerning!) you should know about.
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, but not derivative transactions.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected].
