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Should You Take Comfort From Insider Transactions At Inchcape plc (LON:INCH)?

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Inchcape plc (LON:INCH).

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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

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See our latest analysis for Inchcape

Inchcape Insider Transactions Over The Last Year

Independent Chairman of the Board Nigel Stein made the biggest insider purchase in the last 12 months. That single transaction was for UK£59k worth of shares at a price of UK£5.90 each. That means that an insider was happy to buy shares at around the current price of UK£7.06. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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.

In the last twelve months insiders purchased 13.53k shares for UK£81k. But they sold 7783 for UK£49k. In total, Inchcape insiders bought more than they sold over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

LSE:INCH Recent Insider Trading, January 2nd 2020
LSE:INCH Recent Insider Trading, January 2nd 2020

Inchcape is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Inchcape Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Inchcape. In that time, insiders dumped UK£49k worth of shares. Meanwhile insiders bought UK£4.9k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Does Inchcape Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Inchcape insiders own 2.0% of the company, worth about UK£55m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Inchcape Tell Us?

Our data shows a little more insider selling than buying in the last three months. But the difference is small, and thus, not concerning. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Inchcape and their transactions don't cause us concern. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Inchcape.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.