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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Big Yellow Group Plc (LON:BYG), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. 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 Big Yellow Group
In the last twelve months, the biggest single sale by an insider was when Executive Chairman of the Board Nicholas Vetch sold UK£7.6m worth of shares at a price of UK£9.49 per share. That means that an insider was selling shares at around the current price of UK£9.47. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. The only individual insider seller over the last year was Nicholas Vetch. Notably Nicholas Vetch was also the biggest buyer, having purchased UK£291k worth of shares.
Happily, we note that in the last year insiders paid UK£291k for 31.49k shares. But they sold 800.44k for UK£7.6m. 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Big Yellow Group 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Big Yellow Group insiders own 7.2% of the company, worth about UK£112m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Big Yellow Group Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Big Yellow Group shares in the last quarter. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Big Yellow Group insider transactions don’t fill us with confidence. Of course, the future is what matters most. So if you are interested in Big Yellow Group, you should check out this free report on analyst forecasts for the company.
Of course Big Yellow Group 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.