UK Markets closed

Should You Take Comfort From Insider Transactions At Lamprell plc (LON:LAM)?

Simply Wall St

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 we'll take a look at whether insiders have been buying or selling shares in Lamprell plc (LON:LAM).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.

See our latest analysis for Lamprell

Lamprell Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chief Operating Officer Hani El Kurd bought UK£53k worth of shares at a price of UK£0.53 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.34). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Hani El Kurd was the only individual insider to buy shares in the last twelve months.

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:LAM Recent Insider Trading, February 17th 2020

Lamprell 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 Lamprell

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data isn't picking up on much insider ownership at Lamprell, though insiders do hold about UK£714k worth of shares. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We might be missing something but that seems like very low insider ownership.

What Might The Insider Transactions At Lamprell Tell Us?

It doesn't really mean much that no insider has traded Lamprell shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Lamprell stock. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Lamprell.

Of course Lamprell may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.