We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell SIG plc (LON:SHI), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At SIG
In the last twelve months, the biggest single sale by an insider was when the CEO & Director, Stephen Roland Francis, sold UK£150k worth of shares at a price of UK£0.33 per share. So we know that an insider sold shares at around the present share price of UK£0.33. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Notably Stephen Roland Francis was also the biggest buyer, having purchased UK£280k worth of shares.
In the last twelve months insiders purchased 655.15k shares for UK£280k. But they sold 575.20k shares for UK£196k. In total, SIG insiders bought more than they sold over the last year. They paid about UK£0.43 on average. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Are SIG Insiders Buying Or Selling?
In the last quarter there were insider sales totalling UK£190k. But that was only a smidgen more than the UK£189k worth of buying. Ultimately the overall selling isn't enough to tell us much.
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. Our data isn't picking up on much insider ownership at SIG, though insiders do hold about UK£285k worth of shares. But they may have an indirect interest through a corporate structure that we haven't picked up on. This level of insider ownership is notably low, and not very encouraging.
So What Does This Data Suggest About SIG Insiders?
We note that there's been a little more insider selling than buying, recently. But the difference is small, and thus, not concerning. However, our analysis of transactions over the last year is heartening. We'd like to see bigger individual holdings. However, we don't see anything to make us think SIG insiders are doubting the company. 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. Be aware that SIG is showing 2 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
But note: SIG 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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