Should You Take Comfort From Insider Transactions At Aristocrat Leisure Limited (ASX:ALL)?

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 Aristocrat Leisure Limited (ASX:ALL).

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 equally, we would consider it foolish to ignore insider transactions altogether. 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.’

View our latest analysis for Aristocrat Leisure

Aristocrat Leisure Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Neil Chatfield for AU$144k worth of shares, at about AU$24.02 per share. That implies that an insider found the current price of AU$25.58 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. In this case we’re pleased to report that the insider purchases were made at close to current prices.

In the last twelve months insiders paid AU$406k for 16600 shares purchased. While Aristocrat Leisure insiders bought shares last year, they didn’t sell. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

ASX:ALL Recent Insider Trading, April 14th 2019
ASX:ALL Recent Insider Trading, April 14th 2019

Aristocrat Leisure 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.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Aristocrat Leisure insiders own about AU$24m worth of shares. That equates to 0.1% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Aristocrat Leisure Tell Us?

The fact that there have been no Aristocrat Leisure insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Aristocrat Leisure and we see no evidence to suggest they are worried about 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, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. Thank you for reading.