Read This Before Selling Loblaw Companies Limited (TSE:L) Shares

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Loblaw Companies Limited (TSE:L).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

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. 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.

Check out our latest analysis for Loblaw Companies

Loblaw Companies Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Willard Weston for CA$370m worth of shares, at about CA$74.22 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$71.08). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. We note that Willard Weston was both the biggest buyer and the biggest seller.

Over the last year, we can see that insiders have bought 7.67m shares worth CA$428m. But they sold 4660981 for CA$206m. In the last twelve months there was more buying than selling by Loblaw Companies insiders. Their average price was about CA$55.73. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. 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!

Loblaw Companies is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Loblaw Companies Insiders Bought Stock Recently

At Loblaw Companies,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that insider Willard Weston paid CA$58m for shares in the company. On the other hand, insider Willard Weston netted CA$33m by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership of Loblaw Companies

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Loblaw Companies insiders own 1.1% of the company, currently worth about CA$286m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Loblaw Companies Tell Us?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Loblaw Companies. Looks promising! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Loblaw Companies.

But note: Loblaw Companies 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.

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.

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. Thank you for reading.