We often see insiders buying up shares in companies that perform well over the long term. 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 The Star Entertainment Group Limited (ASX:SGR), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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, 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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
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The Last 12 Months Of Insider Transactions At Star Entertainment Group
Non Executive Director Wallace Sheppard made the biggest insider purchase in the last 12 months. That single transaction was for AU$138k worth of shares at a price of AU$5.50 each. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders bought 150.52k shares for a total of AU$750k. Overall, Star Entertainment Group insiders were net buyers last year. Their average price was about AU$4.98. This is nice to see since it implies that insiders might see value around current prices (around AU$4.58). 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!
Star Entertainment Group 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 Star Entertainment Group Have Bought Stock Recently
It’s good to see that Star Entertainment Group insiders have made notable investments in the company’s shares. Not only was there no selling that we can see, but they collectively bought AU$250k worth of shares. This is a positive in our book as it implies some confidence.
Insider Ownership of Star Entertainment Group
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. Our data indicates that Star Entertainment Group insiders own about AU$9.7m worth of shares (which is 0.2% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we’re not overly impressed by these holdings.
What Might The Insider Transactions At Star Entertainment Group Tell Us?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Star Entertainment Group insiders are reasonably well aligned, and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Star Entertainment Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.