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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Russel Metals Inc. (TSE:RUS).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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’.
The Last 12 Months Of Insider Transactions At Russel Metals
Vice President of Information Systems Maureen Kelly made the biggest insider sale in the last 12 months. That single transaction was for CA$603k worth of shares at a price of CA$30.44 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of CA$23.47. So it is hard to draw any strong conclusion from it.
Happily, we note that in the last year insiders paid CA$935k for 40.81k shares. But they sold 44.35k for CA$1.3m. Over the last year we saw more insider selling of Russel Metals shares, than buying. They sold for an average price of about CA$30.19. Insider selling doesn’t make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of CA$23.47. You can see the insider transactions (by 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!
Russel Metals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Russel Metals Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Russel Metals. Not only was there no selling that we can see, but they collectively bought CA$787k worth of shares. This makes one think the business has some good points.
Does Russel Metals 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. We usually like to see fairly high levels of insider ownership. It appears that Russel Metals insiders own 1.0% of the company, worth about CA$14m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Russel Metals Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. But we can’t say the same for the transactions over the last 12 months. We don’t take much heart from transactions by Russel Metals insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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 email@example.com.