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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Brickworks Limited (ASX:BKW).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Brickworks Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by MD & Executive Director Lindsay Partridge for AU$526k worth of shares, at about AU$19.56 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$19.63. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices. Notably Lindsay Partridge was also the biggest seller.
Happily, we note that in the last year insiders paid AU$881k for 46.21k shares. On the other hand they divested 16.90k shares, for AU$324k. In total, Brickworks insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
Brickworks Insiders Bought Stock Recently
At Brickworks,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, MD & Executive Director Lindsay Partridge bought AU$850k worth of shares in that time. But MD & Executive Director Lindsay Partridge sold shares worth AU$324k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Brickworks insiders own 3.8% of the company, worth about AU$110m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Brickworks Insiders?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Brickworks. One for the watchlist, at least! While we like knowing 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, Brickworks has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
Of course Brickworks may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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