Need To Know: Centrica plc (LON:CNA) Insiders Have Been Selling Shares
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Centrica plc (LON:CNA).
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 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.’
Check out our latest analysis for Centrica
Centrica Insider Transactions Over The Last Year
Group CEO & Executive Director Iain Conn made the biggest insider sale in the last 12 months. That single transaction was for UK£203k worth of shares at a price of UK£1.54 each. So we know that an insider sold shares at around the present share price of UK£1.36. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. Notably Iain Conn was also the biggest buyer, having purchased UK£229k worth of shares.
Over the last year, we can see that insiders have bought 160.19k shares worth UK£229k. But insiders sold 310.99k shares worth UK£478k. All up, insiders sold more shares in Centrica than they bought, over the last year. They sold for an average price of about UK£1.54. It’s not ideal to see that insiders have sold at around the current price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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!
Centrica 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.
Have Centrica Insiders Traded Recently?
Non-Executive Director Margherita Della Valle bought just UK£2.0k worth of shares in that time. That’s not much at all. Looking at the net result, we don’t think these recent trades shed much light on how insiders, as a group, are feeling about the company’s prospects.
Insider Ownership
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Centrica insiders own about UK£9.3m worth of shares. That equates to 0.1% of the company. 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 Does This Data Suggest About Centrica Insiders?
Our data shows a little more insider buying than selling in the last three months. But the difference isn’t much. The insider transactions at Centrica are not inspiring us to buy. And we’re not picking up on high enough insider ownership to give us any comfort. 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 editorial-team@simplywallst.com.
