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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Smith & Nephew plc (LON:SN.).
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, most countries require that the company discloses such transactions to the market.
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. 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 Smith & Nephew
Over the last year, we can see that the biggest insider sale was by the , Rodrigo Bianchi, for UK£1.5m worth of shares, at about UK£13.93 per share. That means that an insider was selling shares at slightly below the current price (UK£16.93). We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 68.9% of Rodrigo Bianchi's stake. The only individual insider seller over the last year was Rodrigo Bianchi.
In the last twelve months insiders purchased 5976 shares for UK£82k. But insiders sold 157k shares worth UK£2.2m. Rodrigo Bianchi ditched 157k shares over the year. The average price per share was US$13.92. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Smith & Nephew better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Smith & Nephew Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Smith & Nephew insiders own 0.08% of the company, worth about UK£11m. 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 Smith & Nephew Insiders?
The fact that there have been no Smith & Nephew insider transactions recently certainly doesn't bother us. Still, the insider transactions at Smith & Nephew in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Smith & Nephew.
Of course Smith & Nephew 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 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.