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Having purchased UK£507k worth of ITM Power Plc (LON:ITM) stock, the recent 3.3% pullback is not what insiders may have expected

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The recent price decline of 3.3% in ITM Power Plc's (LON:ITM) stock may have disappointed insiders who bought UK£507k worth of shares at an average price of UK£4.00 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth UK£397k which is not ideal.

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 ITM Power

ITM Power Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Graham Cooley bought UK£250k worth of shares at a price of UK£4.00 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£3.13). 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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While ITM Power insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

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

Does ITM Power Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. ITM Power insiders own about UK£92m worth of shares (which is 4.8% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At ITM Power Tell Us?

It doesn't really mean much that no insider has traded ITM Power shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think ITM Power insiders are doubting the company, and they do own shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 3 warning signs for ITM Power that deserve your attention before buying any shares.

But note: ITM Power may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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