Ares Commercial Real Estate Corporation’s (NYSE:ACRE) recent US$53m market cap decline means a loss of US$20k for insiders who bought this year
Insiders who bought US$253k worth of Ares Commercial Real Estate Corporation’s (NYSE:ACRE) stock at an average buy price of US$14.05 over the last year may be disappointed by the recent 7.0% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$233k, which is not great.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Before we look at these insider transactions though, you might like to know that our analysis indicates that ACRE is potentially undervalued!
The Last 12 Months Of Insider Transactions At Ares Commercial Real Estate
The Partner William Benjamin made the biggest insider purchase in the last 12 months. That single transaction was for US$253k worth of shares at a price of US$14.05 each. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$12.92). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it’s very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was William Benjamin.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
NYSE:ACRE Insider Trading Volume September 2nd 2022
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.
Insider Ownership Of Ares Commercial Real Estate
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Ares Commercial Real Estate insiders own about US$20m worth of shares. That equates to 2.8% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Ares Commercial Real Estate Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. Overall we don’t see anything to make us think Ares Commercial Real Estate insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Ares Commercial Real Estate. Case in point: We’ve spotted 3 warning signs for Ares Commercial Real Estate you should be aware of, and 2 of them don’t sit too well with us.
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.
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