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 Avensia AB (publ) (STO:AVEN).
Do Insider Transactions Matter?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Avensia
In the last twelve months, the biggest single sale by an insider was when the Executive Vice President of Global Business Development, Jörgen Bertilsson, sold kr8.3m worth of shares at a price of kr16.60 per share. So we know that an insider sold shares at around the present share price of kr15.20. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year, we can see that insiders have bought 175000 shares worth kr1.5m. But insiders sold 530000 shares worth kr8.8m. All up, insiders sold more shares in Avensia than they bought, over the last year. The average sell price was around kr16.55. We don't gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders at Avensia Have Bought Stock Recently
Over the last quarter, Avensia insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought kr969k worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Avensia
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Avensia insiders own 38% of the company, worth about kr212m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Avensia Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. However, the longer term transactions are not so encouraging. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Avensia insiders are reasonably well aligned, and optimistic for the future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Avensia.
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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 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.