Favourable Signals For Capita: Numerous Insiders Acquired Stock
Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Capita plc (LON:CPI), that sends out a positive message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Capita
Capita Insider Transactions Over The Last Year
The Executive Officer Jonathan Lewis made the biggest insider purchase in the last 12 months. That single transaction was for UK£94k worth of shares at a price of UK£0.17 each. We do like to see buying, but this purchase was made at well below the current price of UK£0.20. 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.
Capita insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and 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!
Capita is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership Of Capita
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 information indicates that Capita insiders own about UK£777k worth of shares. We might be missing something but that seems like very low insider ownership.
So What Do The Capita Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Capita shares in the last quarter. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Capita insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Capita. In terms of investment risks, we've identified 1 warning sign with Capita and understanding it should be part of your investment process.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
