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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 Sims Metal Management Limited (ASX:SGM), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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 equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
The Last 12 Months Of Insider Transactions At Sims Metal Management
In the last twelve months, the biggest single sale by an insider was when the Group CEO. MD & Director, Alistair Field, sold AU$383k worth of shares at a price of AU$12.59 per share. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. The silver lining is that this sell-down took place above the latest price (AU$9.90). So it is hard to draw any strong conclusion from it. Alistair Field was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 25500 shares worth AU$309k. But they sold 51533 for AU$636k. Alistair Field ditched 51533 shares over the year. The average price per share was AU$12.34. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Sims Metal Management Insiders Bought Stock Recently
There was some insider buying at Sims Metal Management over the last quarter. Insiders purchased AU$40k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
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. Our data suggests Sims Metal Management insiders own 0.1% of the company, worth about AU$2.6m. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Sims Metal Management Insiders?
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 Sims Metal Management insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. 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.
Of course Sims Metal Management 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 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 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.