Stock Analysis

This Santos Insider Reduced Their Stake By 25%

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ASX:STO
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Looking at Santos Limited's (ASX:STO ) insider transactions over the last year, we can see that insiders were net sellers. That is, there were more number of shares sold by insiders than there were purchased.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Santos

The MD, CEO & Director, Kevin Gallagher, made the biggest insider sale in the last 12 months. That single transaction was for AU$4.7m worth of shares at a price of AU$7.79 each. So we know that an insider sold shares at around the present share price of AU$7.25. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Kevin Gallagher was the only individual insider to sell shares in the last twelve months.

Over the last year, we can see that insiders have bought 35.26k shares worth AU$264k. But insiders sold 900.50k shares worth AU$6.7m. Kevin Gallagher divested 900.50k shares over the last 12 months at an average price of US$7.48. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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ASX:STO Insider Trading Volume December 9th 2023

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).

Insiders At Santos Have Bought Stock Recently

It's good to see that Santos insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought AU$164k worth of shares. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Santos

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Santos insiders own 0.1% of the company, worth about AU$25m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Santos Insiders?

It is good to see recent purchasing. However, the longer term transactions are not so encouraging. While recent transactions indicate confidence in Santos, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. In short they are likely aligned with shareholders. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 1 warning sign for Santos you should be aware of.

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 of direct interests only, but not derivative transactions or indirect interests.

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