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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 Educational Development Corporation (NASDAQ:EDUC).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
The Last 12 Months Of Insider Transactions At Educational Development
Chairman Randall White made the biggest insider sale in the last 12 months. That single transaction was for US$80k worth of shares at a price of US$10.43 each. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$7.36. So it may not tell us anything about how insiders feel about the current share price. Randall White was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 13.48k shares for US$118k. But they sold 11.46k for US$114k. In the last twelve months there was more buying than selling by Educational Development insiders. The average buy price was around US$8.73. This is nice to see since it implies that insiders might see value around current prices (around US$7.36). You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Are Educational Development Insiders Buying Or Selling?
Over the last three months, we’ve seen a bit of insider selling at Educational Development. US$34k worth of shares were sold by Randall White. But the good news is that there was purchasing too , worth US$27k. While it’s not great to see insider selling, the net amount sold isn’t enough for us to want to read anything into it.
Does Educational Development Boast High Insider Ownership?
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. Educational Development insiders own about US$14m worth of shares. That equates to 23% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Educational Development Tell Us?
Our data shows a little more insider selling than buying in the last three months. But the difference isn’t enough to have us worried. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Educational Development and we see no evidence to suggest they are worried about the future. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.