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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. 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 Anglo American plc (LON:AAL).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 it is perfectly logical to keep tabs on what insiders are doing. 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 Anglo American
In the last twelve months, the biggest single sale by an insider was when the , Duncan Wanblad, sold UK£680k worth of shares at a price of UK£16.25 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£19.07. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 72.4% of Duncan Wanblad's stake.
In the last twelve months insiders purchased 4884 shares for UK£86k. But they sold 59651 for UK£1.0m. All up, insiders sold more shares in Anglo American than they bought, over the last year. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Anglo American Have Sold Stock Recently
There was substantially more insider selling, than buying, of Anglo American shares over the last three months. In total, Anik Michaud sold US$357k worth of shares in that time. Meanwhile insiders bought US$29k worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Does Anglo American Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Anglo American insiders own about UK£41m worth of shares. That equates to 0.2% 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.
What Might The Insider Transactions At Anglo American Tell Us?
The stark truth for Anglo American is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Anglo American is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Anglo American.
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.
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.