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 shareholders might well want to know whether insiders have been buying or selling shares in Bellway p.l.c. (LON:BWY).
What Is Insider Buying?
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.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Bellway
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Paul Nigel Smith bought UK£80k worth of shares at a price of UK£20.29 per share. That implies that an insider found the current price of UK£24.37 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.
While Bellway insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Bellway is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Bellway
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 suggests Bellway insiders own 0.09% of the company, worth about UK£2.7m. I generally like to see higher levels of ownership.
So What Do The Bellway Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Bellway shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Bellway insiders bought more shares in the company. Of course, the future is what matters most. So if you are interested in Bellway, you should check out this free report on analyst forecasts for the company.
But note: Bellway 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.
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. 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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