We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Reckitt Benckiser Group plc (LON:RB.).
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, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Reckitt Benckiser Group
Over the last year, we can see that the biggest insider purchase was by Group CEO & Executive Director Laxman Narasimhan for UK£1m worth of shares, at about UK£58.00 per share. That implies that an insider found the current price of UK£64.94 per share to be enticing. 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. The good news for Reckitt Benckiser Group share holders is that insiders were buying at near the current price.
In the last twelve months Reckitt Benckiser Group insiders were buying shares, but not selling. 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!
Reckitt Benckiser Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Reckitt Benckiser Group Have Bought Stock Recently
Over the last quarter, Reckitt Benckiser Group insiders have spent a meaningful amount on shares. We can see that Independent Chairman of the Board Christopher Sinclair paid UK£249k for shares in the company. No-one sold. That shows some optimism about the company's future.
Insider Ownership of Reckitt Benckiser Group
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. 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 0.08% of Reckitt Benckiser Group shares, worth about UK£37m. 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 Do The Reckitt Benckiser Group Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Reckitt Benckiser Group insiders are well aligned, and that they may think the share price is too low. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 2 warning signs for Reckitt Benckiser Group (1 is concerning!) that we believe deserve your full attention.
Of course Reckitt Benckiser Group 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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