It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Lynas Corporation Limited (ASX:LYC).
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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 Lynas
Non-Executive Chairman Richard Harding made the biggest insider purchase in the last 12 months. That single transaction was for AU$100k worth of shares at a price of AU$1.85 each. That means that an insider was happy to buy shares at above the current price. Their view may have changed since then, but at least it shows they felt optimistic at the time. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders paid AU$465k for 253.99k shares purchased. In total, Lynas insiders bought more than they sold over the last year. The average buy price was around AU$1.83. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$1.60. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Lynas Have Bought Stock Recently
Over the last quarter, Lynas insiders have spent a meaningful amount on shares. In total, insiders bought AU$175k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
Does Lynas Boast High Insider Ownership?
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. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own AU$5.2m worth of Lynas stock, about 0.5% of the company. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Lynas Insiders?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Lynas insiders are expecting a bright future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Lynas.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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