We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Nanoco Group plc (LON:NANO), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
Nanoco Group Insider Transactions Over The Last Year
The CEO & Executive Director, Michael Edelman, made the biggest insider sale in the last 12 months. That single transaction was for UK£914k worth of shares at a price of UK£0.50 each. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (UK£0.091). So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid UK£1.3m for 8.13m shares. But insiders sold 6940752 shares worth UK£1.7m. In total, Nanoco Group insiders sold more than they bought over the last year. They sold for an average price of about UK£0.25. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is UK£0.091). 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!
I will like Nanoco Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Nanoco Group Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Nanoco Group, over the last three months. We can see that insider Richard Griffiths paid UK£1.1m for shares in the company. On the other hand, insider Richard Griffiths netted UK£629k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Nanoco Group Boast High Insider Ownership?
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. Insiders own 18% of Nanoco Group shares, worth about UK£4.7m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Nanoco Group Tell Us?
The recent insider purchase is heartening. But we can’t say the same for the transactions over the last 12 months. We don’t take much heart from transactions by Nanoco Group insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Every company has risks, and we’ve spotted 6 warning signs for Nanoco Group (of which 2 can’t be ignored!) you should know about.
Of course Nanoco Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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.
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