We often see insiders buying up shares in companies that perform well over the long term. 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 SEEK Limited (ASX:SEK).
What Is Insider Buying?
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.
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.’
The Last 12 Months Of Insider Transactions At SEEK
Non-Executive Director Michael Wachtel made the biggest insider purchase in the last 12 months. That single transaction was for AU$81k worth of shares at a price of AU$20.37 each. That means that even when the share price was higher, an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. It’s not at all bad to see insiders buy shares at or above current prices.
Happily, we note that in the last year insiders bought 6.90k shares for a total of AU$146k. Overall, SEEK insiders were net buyers last year. Their average price was about AU$21.11. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$17.54. 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does SEEK Boast High Insider Ownership?
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 5.7% of the company, currently worth about AU$349m 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.
So What Do The SEEK Insider Transactions Indicate?
The fact that there have been no SEEK insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like SEEK insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course SEEK 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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