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 shareholders might well want to know whether insiders have been buying or selling shares in Compass Group PLC (LON:CPG).
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.
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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Compass Group
Over the last year, we can see that the biggest insider sale was by Juergen Thamm for UK£136k worth of shares, at about UK£16.94 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of UK£17.40. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. We note that the biggest single sale was only 5.5% of Juergen Thamm’s holding.
Over the last year, we can see that insiders have bought 2.39k shares worth UK£42k. But insiders sold 13.81k shares worth UK£234k. All up, insiders sold more shares in Compass Group than they bought, over the last year. The sellers received a price of around UK£16.94, on average. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
Insiders at Compass Group Have Bought Stock Recently
Over the last quarter, Compass Group insiders have spent a meaningful amount on shares. Specifically, John Bason bought UK£40k worth of shares in that time, and we didn’t record any sales whatsoever. This is a positive in our book as it implies some confidence.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Compass Group insiders own 0.09% of the company, worth about UK£24m. 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 Compass Group Insider Transactions Indicate?
Our data shows a little more insider buying than selling in the last three months. But the difference isn’t much. We don’t take much encouragement from the transactions by Compass Group insiders. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Compass Group, you should check out this free report on analyst forecasts for the company.
Of course Compass Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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