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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Plus500 Ltd. (LON:PLUS), you may well want to know whether insiders have been buying or selling.
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, 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'.
Plus500 Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Senior Strategy Advisor Alon Gonen bought UK£8.6m worth of shares at a price of UK£7.99 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£15.96. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Alon Gonen purchased 2.05m shares over the year. The average price per share was UK£8.11. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Plus500 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.
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. Plus500 insiders own about UK£118m worth of shares (which is 7.2% 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.
So What Does This Data Suggest About Plus500 Insiders?
The fact that there have been no Plus500 insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Plus500 insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Plus500. Case in point: We've spotted 2 warning signs for Plus500 you should be aware of, and 1 of them makes us a bit uncomfortable.
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.
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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