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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Inter Pipeline Ltd. (TSE:IPL).
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 on the market. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Inter Pipeline Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when President Christian Bayle bought CA$482k worth of shares at a price of CA$19.29 per share. That implies that an insider found the current price of CA$20.37 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. In this case we’re pleased to report that the insider purchases were made at close to current prices.
Over the last year, we can see that insiders have bought 47100 shares worth CA$971k. In the last twelve months Inter Pipeline insiders were buying shares, but not selling. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Insiders at Inter Pipeline Have Bought Stock Recently
Over the last quarter, Inter Pipeline insiders have spent a meaningful amount on shares. VP of Finance and Investor Relations Jeremy Roberge spent CA$75k on stock, and there wasn’t any selling. This makes one think the business has some good points.
Does Inter Pipeline Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Inter Pipeline insiders own about CA$17m worth of shares. That equates to 0.2% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Inter Pipeline Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Inter Pipeline insiders are well aligned, and that they may think the share price is too low. Of course, the future is what matters most. So if you are interested in Inter Pipeline, you should check out this free report on analyst forecasts for the company.
But note: Inter Pipeline 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.