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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Paragon Banking Group PLC (LON:PAG), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Paragon Banking Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Chief Executive & Director Nigel Terrington bought UK£64k worth of shares at a price of UK£3.20 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£4.54. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Paragon Banking Group insiders may have bought shares in the last year, but they didn't sell any. They paid about UK£3.53 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
Paragon Banking Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Paragon Banking Group Insiders Bought Stock Recently
We saw some Paragon Banking Group insider buying shares in the last three months. Insiders purchased UK£30k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. However, in this case the amount invested recently is quite small.
Does Paragon Banking Group Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.5% of Paragon Banking Group shares, worth about UK£5.3m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Paragon Banking Group Insiders?
Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. We'd like to see bigger individual holdings. However, we don't see anything to make us think Paragon Banking Group insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Paragon Banking Group. While conducting our analysis, we found that Paragon Banking Group has 1 warning sign and it would be unwise to ignore it.
But note: Paragon Banking Group 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.
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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