Nasdaq-Listed Companies

Don't Ignore The Fact That This Insider Just Sold Some Shares In Energy Recovery, Inc. (NASDAQ:ERII)

Some Energy Recovery, Inc. (NASDAQ:ERII) shareholders may be a little concerned to see that insider Ole Peter Lorentzen recently sold a substantial US$4.2m worth of stock at a price of US$22.55 per share. However, that sale only accounted for 2.7% of their holding, so arguably it doesn't say much about their conviction.

Energy Recovery Insider Transactions Over The Last Year

In fact, the recent sale by Ole Peter Lorentzen was the biggest sale of Energy Recovery shares made by an insider individual in the last twelve months, according to our records. So what is clear is that an insider saw fit to sell at around the current price of US$20.82. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

In the last year Energy Recovery insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volumeNasdaqGS:ERII Insider Trading Volume July 11th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Energy Recovery insiders own 14% of the company, worth about US$166m. 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 Do The Energy Recovery Insider Transactions Indicate?

An insider hasn't bought Energy Recovery stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, Energy Recovery makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Energy Recovery. To that end, you should learn about the 3 warning signs we've spotted with Energy Recovery (including 1 which is potentially serious).

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 editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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