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 before you buy or sell Clover Corporation Limited (ASX:CLV), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Clover Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the CEO, MD & Director, Peter Davey, sold AU$404k worth of shares at a price of AU$1.78 per share. That means that an insider was selling shares at slightly below the current price (AU$1.85). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 33% of Peter Davey's stake. Peter Davey was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 86.13k shares for AU$150k. But insiders sold 227.00k shares worth AU$404k. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Clover insiders own 3.6% of the company, worth about AU$11m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.
So What Do The Clover 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 Clover in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Clover. While conducting our analysis, we found that Clover has 1 warning sign and it would be unwise to ignore it.
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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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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