We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Loblaw Companies Limited (TSE:L), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.
Loblaw Companies Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider Willard Weston for CA$370m worth of shares, at about CA$74.22 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$73.01). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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. Notably Willard Weston was also the biggest seller.
In the last twelve months insiders purchased 4985189 shares for CA$370m. On the other hand they divested 2338434 shares, for CA$173m. Overall, Loblaw Companies insiders were net buyers last 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!
Loblaw Companies 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 Loblaw Companies Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Loblaw Companies. In total, insider Willard Weston bought CA$370m worth of shares in that time. On the other hand, insiders netted CA$173m by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
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. Loblaw Companies insiders own 1.6% of the company, currently worth about CA$413m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Loblaw Companies Tell Us?
It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Loblaw Companies. Looks promising! Of course, the future is what matters most. So if you are interested in Loblaw Companies, you should check out this free report on analyst forecasts for the company.
But note: Loblaw Companies 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.
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 firstname.lastname@example.org. 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.