Shareholders might want to keep a close eye on Elders Limited (ASX:ELD) after insiders sold AU$4.9m stock earlier this year

By
Simply Wall St
Published
April 12, 2022
ASX:ELD
Source: Shutterstock

While Elders Limited (ASX:ELD) shareholders have enjoyed a good week with stock up 5.1%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell AU$4.9m worth of stock in the last year, which could indicate some expected downturn.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Elders

The Last 12 Months Of Insider Transactions At Elders

The CEO, MD & Executive Director, Mark Allison, 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$12.34 each. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$13.73. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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. It is worth noting that this sale was only 33% of Mark Allison's holding. Mark Allison was the only individual insider to sell shares in the last twelve months.

Over the last year, we can see that insiders have bought 9.10k shares worth AU$104k. But insiders sold 400.00k shares worth AU$4.9m. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
ASX:ELD Insider Trading Volume April 12th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at Elders Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Elders. Independent Non-Executive Director Raelene Murphy purchased AU$28k worth of shares in that period. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership of Elders

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. It appears that Elders insiders own 1.5% of the company, worth about AU$33m. 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 Elders Tell Us?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. Our analysis of Elders insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Elders has 2 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

Of course Elders 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.

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