We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Educational Development Corporation (NASDAQ:EDUC).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
Educational Development Insider Transactions Over The Last Year
The Chairman, Randall White, made the biggest insider sale in the last 12 months. That single transaction was for US$80k worth of shares at a price of US$10.43 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$6.01). So it may not shed much light on insider confidence at current levels. Randall White was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid US$108k for 14478 shares. But insiders sold 11456 shares worth US$114k. Randall White sold a total of 11456 shares over the year at an average price of US$9.96. You can see the insider transactions (by 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Educational Development Have Bought Stock Recently
There was some insider buying at Educational Development over the last quarter. Insiders bought US$45k worth of shares in that time. We like it when there are only buyers, and no sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Insider Ownership of Educational Development
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Educational Development insiders own 24% of the company, worth about US$12m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Educational Development Insider Transactions Indicate?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. Our analysis of Educational Development insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. Along with insider transactions, I recommend checking if Educational Development is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course Educational Development 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.