Read This Before Buying SECOS Group Limited (ASX:SES) Shares

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell SECOS Group Limited (ASX:SES), 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.

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 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'.

See our latest analysis for SECOS Group

The Last 12 Months Of Insider Transactions At SECOS Group

In the last twelve months, the biggest single sale by an insider was when the insider, Geoffrey Lord, sold AU$893k worth of shares at a price of AU$0.17 per share. That means that even when the share price was below the current price of AU$0.21, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. It is worth noting that this sale was only 9.6% of Geoffrey Lord's holding. Geoffrey Lord was the only individual insider to sell shares in the last twelve months.

Over the last year, we can see that insiders have bought 776.06k shares worth AU$40k. But insiders sold 5.31m shares worth AU$893k. 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!

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).

SECOS Group Insiders Bought Stock Recently

We saw some SECOS Group insider buying shares in the last three months. Insiders purchased AU$30k worth of shares in that period. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does SECOS Group Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. SECOS Group insiders own 46% of the company, currently worth about AU$57m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At SECOS Group Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. While we gain confidence from high insider ownership of SECOS Group, we can't say the same about their transactions in the last year, in the absence of further purchases. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that SECOS Group has 3 warning signs and it would be unwise to ignore these.

Of course SECOS Group 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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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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