Stock Analysis

Have Insiders Been Buying Loblaw Companies Limited (TSE:L) Shares This Year?

  •  Updated
TSX:L
Source: Shutterstock

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 we'll take a look at whether insiders have been buying or selling shares in Loblaw Companies Limited (TSE:L).

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, 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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for Loblaw Companies

The Last 12 Months Of Insider Transactions At Loblaw Companies

Over the last year, we can see that the biggest insider purchase was by insider Willard Weston for CA$161m worth of shares, at about CA$64.28 per share. That means that an insider was happy to buy shares at above the current price of CA$64.06. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. We note that Willard Weston was both the biggest buyer and the biggest seller.

In the last twelve months insiders purchased 2.87m shares for CA$186m. But they sold 2.51m shares for CA$161m. In total, Loblaw Companies insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
TSX:L Insider Trading Volume December 22nd 2020

Loblaw Companies is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Loblaw Companies Have Bought Stock Recently

At Loblaw Companies,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, two insiders bought CA$161m worth of shares. On the other hand, insider Willard Weston netted CA$161m by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Loblaw Companies insiders own 1.2% of the company, worth about CA$262m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Loblaw Companies Insiders?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Loblaw Companies. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Loblaw Companies. At Simply Wall St, we found 1 warning sign for Loblaw Companies that deserve your attention before buying any shares.

But note: Loblaw Companies may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

If you decide to trade Loblaw Companies, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Valuation is complex, but we're helping make it simple.

Find out whether Loblaw Companies is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About TSX:L

Loblaw Companies

Loblaw Companies Limited, a food and pharmacy company, engages in the grocery, pharmacy, health and beauty, apparel, general merchandise, financial services, and wireless mobile products and services businesses in Canada.

Solid track record with adequate balance sheet and pays a dividend.