It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Industria de Diseño Textil, S.A. (BME:ITX).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
Industria de Diseño Textil Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman Pablo Isla de Tejera for €1.0m worth of shares, at about €26.64 per share. That means that an insider was happy to buy shares at around the current price of €27.22. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. In this case we’re pleased to report that the insider purchases were made at close to current prices.
Happily, we note that in the last year insiders bought 42596 shares for a total of €1.1m. Industria de Diseño Textil insiders may have bought shares in the last year, but they didn’t sell any. You can see the insider transactions (by 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!
Insider Ownership of Industria de Diseño Textil
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Industria de Diseño Textil insiders own about €60m worth of shares. That equates to 0.07% 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 Industria de Diseño Textil Insiders?
It doesn’t really mean much that no insider has traded Industria de Diseño Textil shares in the last quarter. However, our analysis of transactions over the last year is heartening. Overall we don’t see anything to make us think Industria de Diseño Textil insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in Industria de Diseño Textil, you should check out this free report on analyst forecasts for the company.
But note: Industria de Diseño Textil 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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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.