We often see insiders buying up shares in companies that perform well over the long term. 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 Computer Modelling Group Ltd. (TSE:CMG).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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. 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 Computer Modelling Group
The Director, Robert F. Smith, made the biggest insider sale in the last 12 months. That single transaction was for CA$514k worth of shares at a price of CA$6.75 each. That means that an insider was selling shares at around the current price of CA$6.12. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
In the last twelve months insiders purchased 122246 shares for CA$785k. But insiders sold 126302 shares worth CA$881k. Over the last year we saw more insider selling of Computer Modelling Group shares, than buying. 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Computer Modelling Group Have Sold Stock Recently
We have seen a bit of insider selling at Computer Modelling Group, over the last three months. Insiders sold just CA$34k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn't sufficiently substantial to be of much use as a signal.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Computer Modelling Group insiders own about CA$22m worth of shares. That equates to 4.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Computer Modelling Group Tell Us?
We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. Recent insider selling makes us a little nervous, in light of the broader picture of Computer Modelling Group insider transactions. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Computer Modelling Group, you should check out this free report on analyst forecasts for the company.
Of course Computer Modelling Group 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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.