We often see insiders buying up shares in companies that perform well over the long term. 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 Simonds Group Limited (ASX:SIO).
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, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Simonds Group
Founder & Senior Company Advisor Vallence Simonds made the biggest insider purchase in the last 12 months. That single transaction was for AU$524k worth of shares at a price of AU$0.33 each. That implies that an insider found the current (approximate) price enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
In the last twelve months insiders purchased 1.95m shares for AU$628k. On the other hand they divested 27.78k shares, for AU$9.7k. Overall, Simonds Group insiders were net buyers last year. The average buy price was around AU$0.32. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of AU$0.38. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Simonds Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Simonds Group Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Simonds Group. We can see that Vallence Simonds paid AU$524k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.
Insider Ownership of Simonds Group
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Simonds Group insiders own 43% of the company, currently worth about AU$23m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Simonds Group Insider Transactions Indicate?
It is good to see recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Simonds Group. One for the watchlist, at least! To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Simonds Group 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.
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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.