Insiders of CAE Inc. (TSE:CAE) are probably glad they bought last year as their CA$1.5m investment now stands at CA$1.7m
CAE Inc. (TSE:CAE) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 8.8% decline in the stock price. After accounting for the recent loss, the CA$1.5m worth of shares they purchased is now worth CA$1.7m, suggesting a good return on their investment.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for CAE
The Last 12 Months Of Insider Transactions At CAE
Over the last year, we can see that the biggest insider sale was by the Executive VP of Finance & CFO, Sonya Branco, for CA$890k worth of shares, at about CA$38.45 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$32.16. So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we can see that insiders have bought 54.18k shares worth CA$1.5m. But they sold 35.50k shares for CA$1.4m. In the last twelve months there was more buying than selling by CAE insiders. They paid about CA$27.57 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does CAE Boast High 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. CAE insiders own about CA$14m worth of shares. That equates to 0.1% of the company. 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 CAE Insider Transactions Indicate?
It doesn't really mean much that no insider has traded CAE shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in CAE and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, CAE has 4 warning signs (and 1 which is potentially serious) we think you should know about.
Of course CAE may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
