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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 CanWel Building Materials Group Ltd. (TSE:CWX).
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 equally, we would consider it foolish to ignore insider transactions altogether. 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'.
CanWel Building Materials Group Insider Transactions Over The Last Year
President of CanWel Building Materials Division & Director Marc Séguin made the biggest insider purchase in the last 12 months. That single transaction was for CA$146k worth of shares at a price of CA$4.87 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$4.85). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders purchased 155k shares for CA$769k. But insiders sold 16000 shares worth CA$80k. Overall, CanWel Building Materials Group insiders were net buyers 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at CanWel Building Materials Group Have Bought Stock Recently
Over the last quarter, CanWel Building Materials Group insiders have spent a meaningful amount on shares. Specifically, Director Harry Rosenfeld bought CA$77k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Insider Ownership of CanWel Building Materials Group
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. Our data indicates that CanWel Building Materials Group insiders own about CA$11m worth of shares (which is 2.9% of the company). We do generally prefer see higher levels of insider ownership.
So What Do The CanWel Building Materials Group Insider Transactions Indicate?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. Given that insiders also own a fair bit of CanWel Building Materials Group we think they are probably pretty confident of a bright future. 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 CanWel Building Materials 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 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.