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Have Insiders Been Buying Sandvik AB (STO:SAND) Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Sandvik AB (STO:SAND).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.

We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

Check out our latest analysis for Sandvik

The Last 12 Months Of Insider Transactions At Sandvik

President Björn Klas Rosengren made the biggest insider purchase in the last 12 months. That single transaction was for kr1.4m worth of shares at a price of kr156 each. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We generally consider it a positive if insiders have been buying on market, even above the current price.

Happily, we note that in the last year insiders paid kr6.4m for 41.60k shares. On the other hand they divested 22.25k shares, for kr3.5m. Overall, Sandvik insiders were net buyers last year. The average buy price was around kr154. I’d consider this a positive as it suggests insiders see value at around the current price, which is kr125. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

OM:SAND Insider Trading December 24th 18
OM:SAND Insider Trading December 24th 18

I will like Sandvik better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Sandvik insiders own about kr2.8b worth of shares (which is 1.8% 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 Do The Sandvik Insider Transactions Indicate?

The fact that there have been no Sandvik insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Sandvik insiders think the business has merit. Of course, the future is what matters most. So if you are interested in Sandvik, you should check out this free report on analyst forecasts for the company.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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