Don't Ignore The Insider Selling In Brickworks

We wouldn't blame Brickworks Limited (ASX:BKW) shareholders if they were a little worried about the fact that Lindsay Partridge, the MD & Executive Director recently netted about AU$2.0m selling shares at an average price of AU$27.61. That sale reduced their total holding by 22% which is hardly insignificant, but far from the worst we've seen.

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The Last 12 Months Of Insider Transactions At Brickworks

Notably, that recent sale by Lindsay Partridge is the biggest insider sale of Brickworks shares that we've seen in the last year. That means that an insider was selling shares at around the current price of AU$27.19. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Over the last year, we can see that insiders have bought 46.06k shares worth AU$1.3m. On the other hand they divested 96.60k shares, for AU$2.7m. Lindsay Partridge ditched 96.60k shares over the year. The average price per share was AU$27.62. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Does Brickworks Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Brickworks insiders own 3.5% of the company, worth about AU$146m. 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 Brickworks Insiders?

The insider sales have outweighed the insider buying, at Brickworks, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. While conducting our analysis, we found that Brickworks has 1 warning sign and it would be unwise to ignore this.

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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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.