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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 before you buy or sell National Australia Bank Limited (ASX:NAB), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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. 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'.
National Australia Bank Insider Transactions Over The Last Year
Group CEO & Director Philip Chronican made the biggest insider purchase in the last 12 months. That single transaction was for AU$242k worth of shares at a price of AU$24.16 each. That means that an insider was happy to buy shares at around the current price of AU$26.40. 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. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the National Australia Bank insider decided to buy shares at close to current prices. The only individual insider to buy over the last year was Philip Chronican. Notably Philip Chronican was also the biggest seller, having sold AU$34k worth of shares.
The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
National Australia Bank 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 National Australia Bank Have Bought Stock Recently
At National Australia Bank,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, Philip Chronican bought AU$242k worth of shares in that time. But Philip Chronican sold shares worth AU$24k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of National Australia Bank
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that National Australia Bank insiders own 0.03% of the company, worth about AU$23m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The National Australia Bank Insider Transactions Indicate?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest National Australia Bank insiders are well aligned, and that they may think the share price is too low. Of course, the future is what matters most. So if you are interested in National Australia Bank, you should check out this free report on analyst forecasts for the company.
Of course National Australia Bank may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.