Yahoo Finance As Caesars Entertainment, Inc.'s market cap (NASDAQ:CZR) drops to US$9.2b, insiders might be questioning their decision to buy earlier this year
The recent 16% drop in Caesars Entertainment, Inc.'s (NASDAQ:CZR) stock could come as a blow to insiders who purchased US$1.7m worth of stock at an average buy price of US$64.45 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$1.1m, which is not what they expected.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Caesars Entertainment
The Last 12 Months Of Insider Transactions At Caesars Entertainment
The Independent Director Courtney Mather made the biggest insider purchase in the last 12 months. That single transaction was for US$962k worth of shares at a price of US$60.12 each. That means that even when the share price was higher than US$43.14 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Over the last year, we can see that insiders have bought 26.00k shares worth US$1.7m. On the other hand they divested 8.26k shares, for US$881k. In total, Caesars Entertainment 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!
Caesars Entertainment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Caesars Entertainment Have Bought Stock Recently
At Caesars Entertainment,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent US$1.7m on shares. But Independent Director Sandra Morgan sold shares worth US$60k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership of Caesars Entertainment
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. Caesars Entertainment insiders own about US$38m worth of shares. That equates to 0.4% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Caesars Entertainment Tell Us?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Caesars Entertainment insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Caesars Entertainment and understanding them should be part of your investment process.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
