Over the past year, many The Southern Company (NYSE:SO) insiders sold a large stake in the company, which may have piqued investor interest. When evaluating insider trades, knowing whether insiders are buying or selling is generally more beneficial, as the latter can be subject to many interpretations. However, shareholders should take a closer look at whether multiple insiders are selling shares over a period of time.
While we don’t believe shareholders should simply follow insider trades, logic dictates that you pay attention to whether insiders are buying or selling shares.
Before examining these insider trades, please note that our analysis indicates that SO is potentially undervalued!
The last 12 months of insider trading at Southern
Accounting director and controller Ann Daiss has made the biggest insider sale in the last 12 months. This single transaction was for US$506,000 of shares at a price of US$67.47 each. Clearly, therefore, an insider wanted to take money off the table, even below the current price of US$78.27. Generally, we consider it discouraging when insiders sell below the current price, as it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, this is only a weak signal. We note that the largest single sale was just 29% of Ann Daiss’ stake.
Southern insiders haven’t bought any stocks in the past year. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. If you want to know exactly who sold, how much and when, just click on the chart below!
If you like buying stocks that insiders are buying, rather than selling, then you might love this free list of companies. (Hint: insiders bought them).
Is Southern Boast High Insider Proprietary?
Another way to test alignment between a company’s executives and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. Southern insiders own 0.2% of the company, which is currently worth around US$197 million based on recent share price. I like to see this level of insider ownership because it increases the chances that management is thinking about the best interests of shareholders.
So what does this data suggest about Southern insiders?
It doesn’t mean much that no insider traded shares of Southern in the last quarter. It’s great to see high levels of insider ownership, but looking back to last year, we’re not earning the trust of Southern insiders who are selling. So, while it is useful to know what insiders are doing in terms of buying or selling, it is also useful to know the risks that a particular company faces. For example – Southern a 2 warning signs we think you should know.
Sure Southern may not be the best stock to buy. So you might want to see this free set of high quality companies.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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