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Should You Take Comfort From Insider Transactions At Lloyds Banking Group plc (LON:LLOY)?

Simply Wall St
·4 min read

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 we'll take a look at whether insiders have been buying or selling shares in Lloyds Banking Group plc (LON:LLOY).

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 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'.

View our latest analysis for Lloyds Banking Group

The Last 12 Months Of Insider Transactions At Lloyds Banking Group

Over the last year, we can see that the biggest insider purchase was by CFO & Executive Director William Leon Chalmers for UK£269k worth of shares, at about UK£0.27 per share. We do like to see buying, but this purchase was made at well below the current price of UK£0.36. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 2.45m shares worth UK£695k. But insiders sold 721.00k shares worth UK£257k. Overall, Lloyds Banking Group 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
insider-trading-volume

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.

Insiders at Lloyds Banking Group Have Sold Stock Recently

The last quarter saw substantial insider selling of Lloyds Banking Group shares. In total, insider Antonio Lorenzo dumped UK£106k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Lloyds Banking Group Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Lloyds Banking Group insiders own about UK£49m worth of shares. That equates to 0.2% 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 Lloyds Banking Group Tell Us?

An insider sold Lloyds Banking Group shares recently, but they didn't buy any. In contrast, they appear keener if you look at the last twelve months. We like that insiders own a fair amount of the company. So the recent selling doesn't worry us too much. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lloyds Banking Group. Every company has risks, and we've spotted 4 warning signs for Lloyds Banking Group you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.