Yahoo Finance Need To Know: Smith & Nephew plc (LON:SN.) Insiders Have Been Buying Shares
We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Smith & Nephew plc (LON:SN.).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Check out our latest analysis for Smith & Nephew
The Last 12 Months Of Insider Transactions At Smith & Nephew
In the last twelve months, the biggest single purchase by an insider was when Chief Executive Officer Roland Diggelmann bought UK£85k worth of shares at a price of UK£14.24 per share. So it's clear an insider wanted to buy, at around the current price, which is UK£15.18. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the Smith & Nephew insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 15.50k shares worth UK£246k. On the other hand they divested 9.15k shares, for UK£162k. In the last twelve months there was more buying than selling by Smith & Nephew insiders. They paid about UK£15.87 on average. This is nice to see since it implies that insiders might see value around current prices. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Have Smith & Nephew Insiders Traded Recently?
There was some insider buying at Smith & Nephew over the last quarter. In that period Chief Executive Officer Roland Diggelmann spent UK£83k on shares. But Chief Business Development & Corporate Affairs Officer Philip Cowdy sold UK£77k worth. It is nice to see that insiders have bought, but the quantum isn't large enough to get us excited.
Does Smith & Nephew 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. We usually like to see fairly high levels of insider ownership. Smith & Nephew insiders own about UK£9.6m worth of shares. That equates to 0.07% 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 Smith & Nephew Insiders?
We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Smith & Nephew insiders bought more shares in the company. 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. While conducting our analysis, we found that Smith & Nephew has 3 warning signs and it would be unwise to ignore these.
Of course Smith & Nephew 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.
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. 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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