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 before you buy or sell Nanoco Group plc (LON:NANO), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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’.
Nanoco Group Insider Transactions Over The Last Year
The insider, Richard Griffiths, made the biggest insider sale in the last 12 months. That single transaction was for UK£596k worth of shares at a price of UK£0.14 each. That means that an insider was selling shares at slightly below the current price (UK£0.17). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. This single sale was just 11% of Richard Griffiths’s stake. The only individual insider seller over the last year was Richard Griffiths. Notably Richard Griffiths was also the biggest buyer, having purchased UK£1.1m worth of shares.
In the last twelve months insiders purchased 7.13m shares for UK£1.1m. On the other hand they divested 4.54m shares, for UK£629k. In the last twelve months there was more buying than selling by Nanoco Group insiders. The average buy price was around UK£0.16. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Nanoco Group Insiders Bought Stock Recently
Over the last quarter, Nanoco Group insiders have spent a meaningful amount on shares. In total, insiders bought UK£61k worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Nanoco Group insiders own about UK£8.6m worth of shares. That equates to 17% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Nanoco Group Insider Transactions Indicate?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don’t feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Nanoco Group insiders are well aligned, and that they may think the share price is too low. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For instance, we’ve identified 4 warning signs for Nanoco Group (1 shouldn’t be ignored) you should be aware of.
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.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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