Market cap

As Fisker Inc.’s (NYSE:FSR) market cap drops to $2.8 billion, insiders may question their decision to buy earlier this year

Insiders who bought $1.3 million worth of Fisker Inc. (NYSE:FSR) at an average purchase price of US$21.00 over the past year may be disappointed with the stock’s recent 4.4% decline. Insiders buy in the expectation that their investments will appreciate in value over a period of time. However, recent losses have made their investment above worth US$603,000, which is less than ideal.

While we would never suggest that investors base their decisions solely on what a company’s directors have done, we would consider it foolish to completely ignore insider trading.

See our latest analysis for Fisker

Fisker insider trading over the past year

Over the past year, we can see that the biggest insider buy was made by independent director Mark Hickson for US$984,000 worth of shares, at around US$22.84 per share. It is therefore clear that an insider wanted to buy, even at a price higher than the current price of the stock (ie US$9.46). Their perspective may have changed since then, but it at least shows that they were feeling optimistic at the time. We always take careful note of the price paid by insiders when buying stocks. Generally, we are more positive about a stock if insiders bought the stock above current prices, as this suggests they viewed the stock as good value, even at a higher price.

Fortunately, we note that last year insiders paid $1.3m for 63.70k shares. But insiders sold 17.69k shares worth US$189k. Overall, Fisker insiders have been net buyers over the past year. You can see insider trading (by companies and individuals) over the past year illustrated in the table below. If you click on the chart, you can see all individual trades including stock price, individual and date!

volume-of-insider-trading

There are always plenty of stocks that insiders are buying. So if it suits your style you can check each stock one by one or you can take a look at this free list of companies. (Hint: insiders bought them).

Fisker insiders sell shares

The last quarter saw significant insider selling of Fisker shares. In total, CTO Burkhard Huhnke sold US$77,000 worth of stock at that time, and we saw no buying. In light of this, it’s hard to say that all insiders think stocks are a good deal.

Fisker Insider Ownership

I like to look at how many shares insiders own in a company, to help me get a sense of how aligned they are with insiders. I think it’s a good sign if insiders have a significant number of shares in the company. It’s great to see that Fisker insiders own 46% of the company, worth around $1.3 billion. 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 Fisker insiders?

An insider hasn’t bought Fisker stock in the past three months, but there have been some sales. On the other hand, insider trading over the past year is encouraging. We are also comforted by the high levels of insider ownership. So we’re happy to look beyond recent exchanges. 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. Example: we have identified 4 warning signs for Fisker you should be aware, and one of them is a bit of a concern.

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of attractive companies, which have a high return on equity and low debt.

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.