Yahoo Finance Even though Sims Limited's (ASX:SGM) stock is down 4.2% this week, insiders who bought lately made a AU$23k profit
Insiders who purchased Sims Limited (ASX:SGM) shares in the past 12 months are unlikely to be deeply impacted by the stock's 4.2% decline over the past week. Even after accounting for the recent loss, the AU$106k worth of stock purchased by them is now worth AU$129k or in other words, their investment continues to give good returns.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Sims
Sims Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Philip Bainbridge bought AU$100k worth of shares at a price of AU$12.95 per share. We do like to see buying, but this purchase was made at well below the current price of AU$15.65. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Sims insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Sims is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Sims Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 3.9% of Sims shares, worth about AU$115m. 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 Sims Insiders?
The fact that there have been no Sims insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Sims insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for Sims you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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