Yahoo Finance Have Insiders Sold Mammoth Energy Services Inc (NASDAQ:TUSK) Shares Recently?
Mammoth Energy Services, Inc. operates as an integrated oilfield service company. Mammoth Energy Services is one of United States’s large-cap stocks that saw some insider selling over the past three months, with insiders divesting from more than 4.39 million shares during this period. Generally, insiders selling shares in their own firm sends a bearish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider selling declined 2.7% relative to the market. But these signals may not be sufficient to gain confidence on whether to divest. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.
View our latest analysis for Mammoth Energy Services
Who Are Selling Their Shares?
More shares have been sold than bought by Mammoth Energy Services’s insiders in the past three months. In total, individual insiders own less than one million shares in the business, or around 0.27% of total shares outstanding. . The entity that sold on the open market in the last three months was Gulfport Energy Corporation Wexford Capital LP. Although this is an institutional investor, rather than a company executive or board member, the insights gained from direct access to management as a large investor would make it more well-informed than the average retail investor. In this specific instance, I would classify this investor as a company insider.
Is Future Growth Outlook As Bearish?
Analysts’ expectations for earnings over the next 3 years of -12.4% provides negative outlook for the business, consistent with the signal company insiders are sending with their net selling activity. Digging deeper into the line items, analysts anticipate a strong double-digit revenue growth next year, which appears to flow through to an earnings growth of 16.2%. High levels of sustained revenue growth as well as improved cost management could see higher levels of future earnings. But this positive outlook is not supported by insiders’ selling activities which may mean they see things differently to the current optimistic situation. Insiders may feel the growth is unsustainable or the market has significantly overvalued the stock.
Can Share Price Volatility Explain The Sell?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. Within the past three months, Mammoth Energy Services’s share price traded at a high of $40.88 and a low of $27.48. This suggests reasonably high share price volatility with a change of 48.76%. Insiders may deem this relatively meaningful movement as an opportunity to decrease their shareholdings. Or perhaps their reason to sell is not driven by price or growth prospects and merely by their own personal diversification or monetary needs.
Next Steps:
Mammoth Energy Services’s net selling activity tells us the stock has fallen out of favour with some insiders as of late, although the positive expected earnings growth challenges this assumption, while a relatively volatile share price could be the motivation to trade. But we must also be aware that insiders divesting may not actually be based their views on the company’s outlook. Moreover, while insider selling can be a useful prompt, following the lead of an insider, however, will never replace diligent research. there are two important aspects you should further examine:
Financial Health: Does Mammoth Energy Services have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Mammoth Energy Services? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
