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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Volex plc (LON:VLX).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Volex
The Executive Chairman Nathaniel Philip Victor Rothschild made the biggest insider purchase in the last 12 months. That single transaction was for UK£825k worth of shares at a price of UK£1.65 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£3.42. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Over the last year, we can see that insiders have bought 1.14m shares worth UK£1.8m. On the other hand they divested 139.21k shares, for UK£206k. Overall, Volex insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Volex is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Volex Insiders Bought Stock Recently
Over the last quarter, Volex insiders have spent a meaningful amount on shares. Overall, two insiders shelled out UK£273k for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.
Insider Ownership of Volex
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. Volex insiders own 26% of the company, currently worth about UK£136m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Volex Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Volex. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Volex. Case in point: We've spotted 1 warning sign for Volex you should be aware of.
Of course Volex 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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