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 Abcam plc (LON:ABC).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Abcam Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Founder & Non-Executive Deputy Chairman, Jonathan Milner, for UK£17m worth of shares, at about UK£14.41 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (UK£11.78). So it is hard to draw any strong conclusion from it. Notably Jonathan Milner was also the biggest buyer, having purchased UK£2.3m worth of shares.
Happily, we note that in the last year insiders paid UK£2.3m for 209k shares. On the other hand they divested 1.2m shares, for UK£17m. All up, insiders sold more shares in Abcam than they bought, over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Abcam better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Abcam Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Abcam insiders own 9.8% of the company, worth about UK£238m. 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 Abcam Insiders?
The fact that there have been no Abcam insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Abcam insider transactions don't fill us with confidence. 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.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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