Insiders at Johns Lyng Group Limited (ASX:JLG) sold AU$23m worth of stock, a potential red flag that needs to be monitored

By
Simply Wall St
Published
October 08, 2021
ASX:JLG
Source: Shutterstock

Despite a 6.1% gain in Johns Lyng Group Limited's (ASX:JLG) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of AU$23m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Johns Lyng Group

Johns Lyng Group Insider Transactions Over The Last Year

The MD, CEO & Executive Director, Scott Didier, made the biggest insider sale in the last 12 months. That single transaction was for AU$13m worth of shares at a price of AU$4.40 each. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$6.40. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 5.1% of Scott Didier's holding.

In the last year Johns Lyng Group insiders didn't buy any company stock. 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!

insider-trading-volume
ASX:JLG Insider Trading Volume October 8th 2021

I will like Johns Lyng 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.

Does Johns Lyng Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Johns Lyng Group insiders own 34% of the company, worth about AU$490m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Johns Lyng Group Insiders?

The fact that there have been no Johns Lyng Group insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Johns Lyng Group insider transactions don't fill us with confidence. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Johns Lyng Group has 1 warning sign we think you should be aware of.

Of course Johns Lyng 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.