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 shareholders might well want to know whether insiders have been buying or selling shares in Shaw Communications Inc. (TSE:SJR.B).
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, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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.'
Shaw Communications Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Independent Director Willard Yuill for CA$14m worth of shares, at about CA$27.08 per share. That means that an insider was selling shares at below the current price (CA$27.57). Even though it doesn't necessarily mean anything, that's certainly not a positive sign, in our book. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 11.1% of Willard Yuill's stake.
We note that in the last year insiders divested 735.63k shares for a total of CA$19m. Over the last year we saw more insider selling of Shaw Communications shares, than buying. The average sell price was around CA$26.47. We don't gain much confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see a visual depiction of insider transactions (by individuals) 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!
I will like Shaw Communications better if I see some big insider buys. While we wait, check out this freelist of growing companies with considerable, recent, insider buying.
Shaw Communications Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Shaw Communications shares. Specifically, Willard Yuill ditched CA$675k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the directors think that the shares are a bargain.
Does Shaw Communications Boast High Insider Ownership?
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. Shaw Communications insiders own 8.2% of the company, currently worth about CA$1.2b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Shaw Communications Tell Us?
An insider sold stock recently, but they haven't been buying. And even if we look to the last year, we didn't see any purchases. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this freereport showing analyst forecasts for its future.
But note: Shaw Communications may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE and low debt.
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