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We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Thai Beverage Public Company Limited (SGX:Y92), you may well want to know whether insiders have been buying or selling.
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 on the market. 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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Thai Beverage Insider Transactions Over The Last Year
Senior EVP Ueychai Tantha-Obhas made the biggest insider purchase in the last 12 months. That single transaction was for S$121k worth of shares at a price of S$0.60 each. Even though the purchase was made at a significantly lower price than the recent price (S$0.83), we still think insider buying is a positive. But because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
Ueychai Tantha-Obhas purchased 280k shares over the year. The average price per share was S$0.65. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Thai Beverage insiders own 4.8% of the company, worth about S$993m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Thai Beverage Insider Transactions Indicate?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Thai Beverage insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Thai Beverage.
But note: Thai Beverage 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.