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Frontier Developments plc (LON:FDEV) Insiders Increased Their Holdings

Kelly Murphy

We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in Frontier Developments plc (LON:FDEV).

What Is Insider Selling?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

View our latest analysis for Frontier Developments

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Frontier Developments Insider Transactions Over The Last Year

Non-Executive Chairman David Gammon made the biggest insider purchase in the last 12 months. That single transaction was for UK£52k worth of shares at a price of UK£10.45 each. That means that an insider was happy to buy shares at above the current price. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices. David Gammon was the only individual insider to buy over the year.

You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

AIM:FDEV Insider Trading January 29th 19

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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. Frontier Developments insiders own about UK£134m worth of shares (which is 39% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Frontier Developments Tell Us?

The fact that there have been no Frontier Developments insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Frontier Developments insiders think the business has merit. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Frontier Developments.

Of course Frontier Developments 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 editorial-team@simplywallst.com.