Stock Analysis

Read This Before Buying Corporate Travel Management Limited (ASX:CTD) Shares

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ASX:CTD
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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Corporate Travel Management Limited (ASX:CTD), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Corporate Travel Management

The Last 12 Months Of Insider Transactions At Corporate Travel Management

Over the last year, we can see that the biggest insider sale was by the Global COO & Executive Director, Laura Ruffles, for AU$2.8m worth of shares, at about AU$20.02 per share. So we know that an insider sold shares at around the present share price of AU$18.90. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive). Laura Ruffles was the only individual insider to sell over the last year.

In the last twelve months insiders purchased 9.22k shares for AU$129k. But insiders sold 137.53k shares worth AU$2.8m. 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:CTD Insider Trading Volume February 17th 2021

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Corporate Travel Management

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. Corporate Travel Management insiders own 18% of the company, currently worth about AU$453m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Corporate Travel Management Tell Us?

The fact that there have been no Corporate Travel Management insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Corporate Travel Management, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 1 warning sign for Corporate Travel Management you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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