We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in ILPRA S.p.A. (BIT:ILP).
What Is Insider Buying?
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.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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’.
ILPRA Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Cristina Maldifassi bought €154k worth of shares at a price of €2.20 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being €2.14). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. We note that Cristina Maldifassi was both the biggest buyer and the biggest seller.
Over the last year, we can see that insiders have bought 187.80k shares worth €410k. But insiders sold 247800 shares worth €539k. In total, ILPRA insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Are ILPRA Insiders Buying Or Selling?
There was some insider buying at ILPRA over the last quarter. Chairman & Managing Director Maurizio Bertocco shelled out €5.0k for shares in that time. 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. ILPRA insiders own about €20m worth of shares (which is 78% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At ILPRA Tell Us?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of ILPRA insider transactions don’t fill us with confidence. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. For instance, we’ve identified 5 warning signs for ILPRA (2 make us uncomfortable) you should be aware of.
But note: ILPRA 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.
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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. Thank you for reading.