IDP Education Limited's (ASX:IEL) insiders who sold earlier this year may be offered solace in this recent price drop

By
Simply Wall St
Published
December 17, 2021
ASX:IEL
Source: Shutterstock

Despite the fact that IDP Education Limited's (ASX:IEL) value has dropped 3.1% in the last week insiders who sold AU$5.0m worth of stock in the past 12 months have had less success. The average selling price of AU$32.60 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for IDP Education

IDP Education Insider Transactions Over The Last Year

The MD, CEO & Director, Andrew Barkla, made the biggest insider sale in the last 12 months. That single transaction was for AU$4.9m worth of shares at a price of AU$32.59 each. That means that an insider was selling shares at slightly below the current price (AU$34.49). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 38% of Andrew Barkla's holding.

In total, IDP Education insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:IEL Insider Trading Volume December 17th 2021

I will like IDP Education better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders at IDP Education Have Sold Stock Recently

Over the last three months, we've seen a bit of insider selling at IDP Education. The selling netted AU$93k for Independent Non-Executive Chairman Peter Polson. But AU$25k was spent on buying, too, (as we mentioned above) . While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.

Does IDP Education Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.1% of IDP Education shares, worth about AU$13m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The IDP Education Insider Transactions Indicate?

Unfortunately, there has been more insider selling of IDP Education stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 2 warning signs for IDP Education and we suggest you have a look.

Of course IDP Education may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.