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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 before you buy or sell Smart Metering Systems plc (LON:SMS), you may well want to know whether insiders have been buying or selling.
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, 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Smart Metering Systems Insider Transactions Over The Last Year
CEO & Executive Director Alan Foy made the biggest insider sale in the last 12 months. That single transaction was for UK£14m worth of shares at a price of UK£8.00 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of UK£6.57. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Alan Foy.
In the last twelve months insiders purchased 1.82k shares for UK£13k. But they sold 1.80m for UK£14m. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Smart Metering Systems
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Smart Metering Systems insiders own about UK£60m worth of shares. That equates to 8.1% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Smart Metering Systems Insiders?
It doesn’t really mean much that no insider has traded Smart Metering Systems shares in the last quarter. Still, the insider transactions at Smart Metering Systems in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.