Challenger Limited (ASX:CGF) Insiders Increased Their Holdings

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 we'll take a look at whether insiders have been buying or selling shares in Challenger Limited (ASX:CGF).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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'.

Check out our latest analysis for Challenger

The Last 12 Months Of Insider Transactions At Challenger

The MD, CEO & Director Richard Howes made the biggest insider purchase in the last 12 months. That single transaction was for AU$958k worth of shares at a price of AU$3.83 each. We do like to see buying, but this purchase was made at well below the current price of AU$6.35. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Happily, we note that in the last year insiders paid AU$1.4m for 352.00k shares. On the other hand they divested 100.00k shares, for AU$384k. In the last twelve months there was more buying than selling by Challenger insiders. 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!

Challenger is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Challenger insiders own about AU$12m worth of shares (which is 0.3% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About Challenger Insiders?

It doesn't really mean much that no insider has traded Challenger shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Challenger and their transactions don't cause us concern. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Challenger has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

But note: Challenger may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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