Quite a few insiders invested in British American Tobacco p.l.c. (LON:BATS) last year which is positive news for shareholders
It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in British American Tobacco p.l.c.'s (LON:BATS) case, it's fantastic news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for British American Tobacco
British American Tobacco Insider Transactions Over The Last Year
The Independent Non-Executive Director Ming Kwan made the biggest insider purchase in the last 12 months. That single transaction was for UK£266k worth of shares at a price of UK£33.22 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£32.77). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 11.00k shares for UK£364k. On the other hand they divested 5.06k shares, for UK£177k. In total, British American Tobacco insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and 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!
British American Tobacco is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
British American Tobacco Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of British American Tobacco shares over the last three months. In total, Director of Talent Hae Kim sold UK£175k worth of shares in that time. Meanwhile Independent Non-Executive Director Karen Guerra bought UK£98k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership Of British American Tobacco
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. British American Tobacco insiders own 8.7% of the company, currently worth about UK£6.4b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About British American Tobacco Insiders?
Unfortunately, there has been more insider selling of British American Tobacco stock, than buying, in the last three months. But we take heart from prior transactions. And insider ownership remains quite considerable. So the recent selling doesn't worry us. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 3 warning signs for British American Tobacco and we suggest you have a look.
Of course British American Tobacco 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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