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 we'll take a look at whether insiders have been buying or selling shares in Costain Group PLC ( LON:COST ).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Costain Group Insider Transactions Over The Last Year
The CEO, Member of Group Executive Board & Director Alexander Vaughan made the biggest insider purchase in the last 12 months. That single transaction was for UK£50k worth of shares at a price of UK£0.60 each. That means that an insider was happy to buy shares at around the current price of UK£0.61. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Costain Group insiders may have bought shares in the last year, but they didn't sell any.
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.
Are Costain Group Insiders Buying Or Selling?
We saw some Costain Group insider buying shares in the last three months. CEO, Member of Group Executive Board & Director Alexander Vaughan bought UK£4.6k worth of shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Does Costain Group Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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 information indicates that Costain Group insiders own about UK£591k worth of shares. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
So What Do The Costain Group Insider Transactions Indicate?
Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Costain Group insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Costain Group. At Simply Wall St, we've found that Costain Group has 2 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.
But note: Costain Group may not be the best stock to buy . So take a peek at this free list of interesting companies with high ROE 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, 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.
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