We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell CSR Limited (ASX:CSR), 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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At CSR
In the last twelve months, the biggest single purchase by an insider was when CEO, MD & Executive Director Alan Sindel bought AU$682k worth of shares at a price of AU$3.36 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$4.30), we still think insider buying is a positive. But 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 bought 541k shares for a total of AU$1.5m. In the last twelve months CSR insiders were buying shares, but not selling. The average buy price was around AU$2.75. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today’s share price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
CSR Insiders Bought Stock Recently
It’s good to see that CSR insiders have made notable investments in the company’s shares. Overall, five insiders shelled out AU$897k for shares in the company — and none sold. This makes one think the business has some good points.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 0.6% of CSR shares, worth about AU$12m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About CSR Insiders?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of CSR we think they are probably pretty confident of a bright future. Of course, the future is what matters most. So if you are interested in CSR, you should check out this free report on analyst forecasts for the company.
Of course CSR 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.