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 shareholders might well want to know whether insiders have been buying or selling shares in Red Rock Resorts, Inc. (NASDAQ:RRR).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
Red Rock Resorts Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Vice Chairman of the Board Lorenzo Fertitta bought US$10.0m worth of shares at a price of US$14.12 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$19.46. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.
In the last twelve months Red Rock Resorts insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Red Rock Resorts Insiders Bought Stock Recently
It’s good to see that Red Rock Resorts insiders have made notable investments in the company’s shares. Overall, two insiders shelled out US$72m for shares in the company — and none sold. This is a positive in our book as it implies some confidence.
Does Red Rock Resorts Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Red Rock Resorts insiders own 7.8% of the company, currently worth about US$167m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Red Rock Resorts Insiders?
It’s certainly positive to see the recent insider purchases. 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. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Red Rock Resorts. That’s what I like to see! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. To that end, you should learn about the 2 warning signs we’ve spotted with Red Rock Resorts (including 1 which shouldn’t be ignored).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.