Stock Analysis

How Much Are BlueScope Steel Limited (ASX:BSL) Insiders Taking Off The Table?

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ASX:BSL
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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell BlueScope Steel Limited (ASX:BSL), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

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The Last 12 Months Of Insider Transactions At BlueScope Steel

Over the last year, we can see that the biggest insider sale was by the MD, CEO & Director, Mark Vassella, for AU$5.7m worth of shares, at about AU$12.25 per share. So we know that an insider sold shares at around the present share price of AU$11.37. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Mark Vassella was the only individual insider to sell over the last year.

Over the last year, we can see that insiders have bought 11.70k shares worth AU$125k. But insiders sold 463.45k shares worth AU$5.7m. 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!

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ASX:BSL Insider Trading Volume July 15th 2020

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Does BlueScope Steel Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. BlueScope Steel insiders own about AU$30m worth of shares. That equates to 0.6% of the company. 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 Do The BlueScope Steel Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at BlueScope Steel in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. 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. For example - BlueScope Steel has 1 warning sign we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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