We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in SEEK Limited (ASX:SEK).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia 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’.
SEEK Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Co-Founder Andrew Bassat for AU$10m worth of shares, at about AU$20.58 per share. So what is clear is that an insider saw fit to sell at around the current price of AU$17.10. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
Over the last year, we can see that insiders have bought 6.90k shares worth AU$146k. But they sold 510.00k for AU$10m. All up, insiders sold more shares in SEEK than they bought, over the last year. They sold for an average price of about AU$20.58. It’s not particularly great to see insiders were selling shares around current prices (shares recently traded at AU$17.10). 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 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!
SEEK is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at SEEK Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at SEEK. Specifically, Michael Wachtel bought AU$81k worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
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. SEEK insiders own about AU$245m worth of shares (which is 5.7% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At SEEK Tell Us?
The recent insider purchase is heartening. But we can’t say the same for the transactions over the last 12 months. We’re not thrilled with the relatively low insider ownership and the longer term transaction history. But we like the recent purchasing. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for SEEK.
Of course SEEK may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.