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 we'll take a look at whether insiders have been buying or selling shares in Atlas Arteria Limited (ASX:ALX).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Atlas Arteria
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Jean-Georges Malcor for AU$124k worth of shares, at about AU$7.28 per share. That means that even when the share price was higher than AU$6.99 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Over the last year, we can see that insiders have bought 48073 shares worth AU$337k. While Atlas Arteria insiders bought shares last year, they didn't sell. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Atlas Arteria is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Atlas Arteria Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Atlas Arteria. Overall, 4 insiders shelled out AU$303k for shares in the company -- and none sold. This makes one think the business has some good points.
Insider Ownership of Atlas Arteria
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. From what we can see in our data, insiders own only about AU$1.4m worth of Atlas Arteria shares. This level of insider ownership is notably low, and not very encouraging.
So What Do The Atlas Arteria Insider Transactions Indicate?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Atlas Arteria insiders are expecting a bright future. Of course, the future is what matters most. So if you are interested in Atlas Arteria, you should check out this free report on analyst forecasts for the company.
Of course Atlas Arteria may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.