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 shareholders might well want to know whether insiders have been buying or selling shares in Phoslock Environmental Technologies Limited (ASX:PET).
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, 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 it is perfectly logical to keep tabs on what insiders are doing. 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.’
Phoslock Environmental Technologies Insider Transactions Over The Last Year
Non-Executive Chairman of the Board Laurence Freedman made the biggest insider sale in the last 12 months. That single transaction was for AU$1.6m worth of shares at a price of AU$0.40 each. So we know that an insider sold shares at around the present share price of AU$0.38. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In total, Phoslock Environmental Technologies insiders sold more than they bought over the last year. They sold for an average price of about AU$0.41. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Phoslock Environmental Technologies
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. Insiders own 37% of Phoslock Environmental Technologies shares, worth about AU$77m. 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 Does This Data Suggest About Phoslock Environmental Technologies Insiders?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. We don’t take much encouragement from the transactions by Phoslock Environmental Technologies insiders. The modest level of insider ownership is, at least, some comfort. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course Phoslock Environmental Technologies may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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