We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Beacon Roofing Supply, Inc. (NASDAQ:BECN).
What Is Insider Buying?
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.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Beacon Roofing Supply
Over the last year, we can see that the biggest insider purchase was by Independent Director Neil Novich for US$498k worth of shares, at about US$30.29 per share. So it’s clear an insider wanted to buy, at around the current price, which is US$35.16. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it’s a good sign on balance, but keep in mind they may no longer see value. In this case we’re pleased to report that the insider purchases were made at close to current prices.
Over the last year, we can see that insiders have bought 65279 shares worth US$2.1m. But insiders sold 5250 shares worth US$200k. In the last twelve months there was more buying than selling by Beacon Roofing Supply insiders. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Insiders at Beacon Roofing Supply Have Bought Stock Recently
At Beacon Roofing Supply,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, Independent Director Richard Frost bought US$402k worth of shares in that time. On the other hand, C. Swank netted US$200k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of Beacon Roofing Supply
For a common shareholder, it is worth checking how many shares are held by company insiders. 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 0.6% of Beacon Roofing Supply shares, worth about US$15m. 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 Do The Beacon Roofing Supply Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Insiders likely see value in Beacon Roofing Supply shares, given these transactions (along with notable insider ownership of the company). If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Beacon Roofing Supply 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.