We often see insiders buying up shares in companies that perform well over the long term. 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 Emeco Holdings Limited (ASX:EHL).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
The Last 12 Months Of Insider Transactions At Emeco Holdings
The MD, CEO & Executive Director, Ian Testrow, made the biggest insider sale in the last 12 months. That single transaction was for AU$306k worth of shares at a price of AU$3.60 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of AU$2.11. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Ian Testrow. Notably Ian Testrow was also the biggest buyer, having purchased AU$40k worth of shares.
The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Insider Ownership of Emeco Holdings
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data isn't picking up on much insider ownership at Emeco Holdings, though insiders do hold about AU$72k worth of shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
So What Does This Data Suggest About Emeco Holdings Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Emeco Holdings insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. Of course, the future is what matters most. So if you are interested in Emeco Holdings, you should check out this free report on analyst forecasts for the company.
But note: Emeco Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.