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 before you buy or sell Héroux-Devtek Inc. (TSE:HRX), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
The Last 12 Months Of Insider Transactions At Héroux-Devtek
Over the last year, we can see that the biggest insider purchase was by Executive Chairman of the Board Gilles Labbé for CA$517k worth of shares, at about CA$12.93 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$16.98. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
Over the last year, we can see that insiders have bought 71445 shares worth CA$921k. But insiders sold 3300 shares worth CA$56k. In the last twelve months there was more buying than selling by Héroux-Devtek insiders. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Héroux-Devtek Insiders Are Selling The Stock
The last three months saw some Héroux-Devtek insider selling. Vice-President of Sales & Program Management Jean Gravel sold just CA$56k worth of shares in that time. It’s not great to see insider selling, nor the lack of recent buyers. But the volume sold is so low that it really doesn’t bother us.
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. Héroux-Devtek insiders own about CA$71m worth of shares. That equates to 12% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Héroux-Devtek Insiders?
An insider sold stock recently, but they haven’t been buying. But we take heart from prior transactions. It’s good to see insiders are shareholders. So the recent selling doesn’t worry us too much. Of course, the future is what matters most. So if you are interested in Héroux-Devtek, you should check out this free report on analyst forecasts for the company.
But note: Héroux-Devtek 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.