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We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in K-Bro Linen Inc. (TSE:KBL).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 K-Bro Linen
In the last twelve months, the biggest single sale by an insider was when the President, Linda McCurdy, sold CA$1.2m worth of shares at a price of CA$39.10 per share. So it’s clear an insider wanted to take some cash off the table, even slightly below the current price of CA$39.20. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 18.1% of Linda McCurdy’s stake.
All up, insiders sold more shares in K-Bro Linen than they bought, over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like K-Bro Linen better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at K-Bro Linen Have Sold Stock Recently
The last three months saw some K-Bro Linen insider selling. Ryo Utahara only netted CA$28k selling shares, in that period. It’s not great to see insider selling, nor the lack of recent buyers. But the amount sold isn’t enough for us to put any weight on it.
Insider Ownership of K-Bro Linen
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 K-Bro Linen insiders own 3.3% of the company, worth about CA$14m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About K-Bro Linen Insiders?
We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we’re not worried. Recent sales exacerbate our caution arising from analysis of K-Bro Linen insider transactions. The modest level of insider ownership is, at least, some comfort. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for K-Bro Linen.
Of course K-Bro Linen may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.