We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Nutrien Ltd. (TSE:NTR), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
The Last 12 Months Of Insider Transactions At Nutrien
Over the last year, we can see that the biggest insider purchase was by Executive VP and Chief Human Resources & Administrative Officer Michael Webb for CA$118k worth of shares, at about CA$69.95 per share. So it's clear an insider wanted to buy, at around the current price, which is CA$74.28. 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 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. The good news for Nutrien share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was Michael Webb.
Michael Webb purchased 2.29k shares over the year. The average price per share was CA$64.44. The chart below shows insider transactions (by companies and 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!
Nutrien is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Nutrien
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. Insiders own 0.03% of Nutrien shares, worth about CA$15m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Nutrien Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Nutrien shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Nutrien and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Nutrien. To assist with this, we've discovered 4 warning signs that you should run your eye over to get a better picture of Nutrien.
Of course Nutrien 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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