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 Element Fleet Management Corp. (TSE:EFN).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. 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.'
Element Fleet Management Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by CEO & Director Jay Forbes for CA$1.2m worth of shares, at about CA$5.77 per share. That means that an insider was happy to buy shares at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Happily, we note that in the last year insiders bought 1.08m shares for a total of CA$6.6m. Overall, Element Fleet Management insiders were net buyers last year. Their average price was about CA$6.05. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price (CA$6.60). You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).
Insiders at Element Fleet Management Have Bought Stock Recently
Over the last quarter, Element Fleet Management insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought CA$2.2m worth of shares. This is a positive in our book as it implies some confidence.
Does Element Fleet Management 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Element Fleet Management insiders own 1.0% of the company, currently worth about CA$31m 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.
So What Does This Data Suggest About Element Fleet Management Insiders?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. Given that insiders also own a fair bit of Element Fleet Management we think they are probably pretty confident of a bright future. Therefore, you should should definitely take a look at this FREEreport showing analyst forecasts for Element Fleet Management.
Of course Element Fleet Management may not be the best stock to buy. So you may wish to see this freecollection of high quality companies.
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The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.