How Much Are Home Capital Group Inc. (TSE:HCG) Insiders Taking Off The Table?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Home Capital Group Inc. (TSE:HCG), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

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 equally, we would consider it foolish to ignore insider transactions altogether. 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'.

See our latest analysis for Home Capital Group

The Last 12 Months Of Insider Transactions At Home Capital Group

The insider, Sheng Chung, made the biggest insider sale in the last 12 months. That single transaction was for CA$8.0m worth of shares at a price of CA$34.99 each. So we know that an insider sold shares at around the present share price of CA$33.12. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Notably Sheng Chung was also the biggest buyer, having purchased CA$5.2m worth of shares.

Happily, we note that in the last year insiders paid CA$5.2m for 291.20k shares. But insiders sold 360004 shares worth CA$12m. Over the last year we saw more insider selling of Home Capital Group shares, than buying. 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!

I will like Home Capital 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.

Home Capital Group Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Home Capital Group. In total, insiders dumped CA$12m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Home Capital Group insiders own 7.1% of the company, currently worth about CA$134m based on the recent share price. 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 Does This Data Suggest About Home Capital Group Insiders?

Insiders sold Home Capital Group shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But since Home Capital Group is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Home Capital Group.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 editorial-team@simplywallst.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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