We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Héroux-Devtek Inc. (TSE:HRX), you may well want to know whether insiders have been buying or selling.
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 on the market. However, rules govern insider transactions, and certain disclosures are required.
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.'
Héroux-Devtek Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive Chairman of the Board Gilles Labbé bought CA$517k worth of shares at a price of CA$12.93 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$20.02. 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.
Happily, we note that in the last year insiders paid CA$921k for 71445 shares. But they sold 3300 for CA$56k. In total, Héroux-Devtek insiders bought more than they sold over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Héroux-Devtek 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.
Insiders at Héroux-Devtek Have Sold Stock Recently
We have seen a bit of insider selling at Héroux-Devtek, over the last three months. Vice-President of Sales & Program Management Jean Gravel divested only CA$56k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.
Many investors like to check how much of a company is owned by 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 12% of Héroux-Devtek shares, worth about CA$84m. 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 Héroux-Devtek Insider Transactions Indicate?
An insider sold Héroux-Devtek shares recently, but they didn't buy any. But we take heart from prior transactions. It's good to see insiders are shareholders. So the recent selling doesn't worry us too much. Of course, the future is what matters most. So if you are interested in Héroux-Devtek, you should check out this free report on analyst forecasts for the company.
Of course Héroux-Devtek 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.
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