It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in SIG plc's (LON:SHI) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
SIG Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Kathryn Durrant bought UK£50k worth of shares at a price of UK£0.49 per share. That means that even when the share price was higher than UK£0.34 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 439.52k shares for UK£208k. But insiders sold 208.74k shares worth UK£99k. In the last twelve months there was more buying than selling by SIG insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
SIG is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does SIG 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. Our data isn't picking up on much insider ownership at SIG, though insiders do hold about UK£702k worth of shares. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
What Might The Insider Transactions At SIG Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if SIG insiders bought more shares in the company. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for SIG.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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