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Insiders saw their UK£1.6m investment bump up to UK£1.9m after British American Tobacco p.l.c. (LON:BATS) soared 3.5% last week

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Last week, British American Tobacco p.l.c. (LON:BATS) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 3.5% last week, resulting in a UK£2.4b increase in the company's market worth. As a result, the stock they originally bought for UK£1.6m is now worth UK£1.9m.

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 British American Tobacco

The Last 12 Months Of Insider Transactions At British American Tobacco

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman of the Board Luc Jobin bought UK£1.2m worth of shares at a price of UK£25.98 per share. Even though the purchase was made at a significantly lower price than the recent price (UK£31.38), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

While British American Tobacco insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

British American Tobacco is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does British American Tobacco Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that British American Tobacco insiders own 8.2% of the company, worth about UK£5.9b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About British American Tobacco Insiders?

It doesn't really mean much that no insider has traded British American Tobacco shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, British American Tobacco insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 2 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in British American Tobacco.

But note: British American Tobacco 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.