Some California Resources Corporation (NYSE:CRC) shareholders may be a little concerned to see that the Executive VP, Michael Preston, recently sold a substantial US$1.6m worth of stock at a price of US$59.82 per share. That diminished their holding by a very significant 62%, which arguably implies a strong desire to reallocate capital.

California Resources Insider Transactions Over The Last Year

Notably, that recent sale by Michael Preston is the biggest insider sale of California Resources shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$61.87. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 62% of Michael Preston's stake.

In the last twelve months insiders purchased 5.89k shares for US$281k. But they sold 98.69k shares for US$6.2m. In total, California Resources insiders sold more than they bought 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!

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Insider Ownership Of California Resources

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.5% of California Resources shares, worth about US$29m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The California Resources Insider Transactions Indicate?

Insiders sold California Resources shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example - California Resources has 2 warning signs we think you should be aware of.

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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 of direct interests only, but not derivative transactions or indirect interests.

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.