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 Benchmark Botanics Inc. (CNSX:BBT), 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 on the market. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Benchmark Botanics
Over the last year, we can see that the biggest insider sale was by COO & Director Claude Stowell for CA$113k worth of shares, at about CA$0.45 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is CA$0.33. So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 502.10k shares for a total of CA$249k. In total, Benchmark Botanics insiders sold more than they bought over the last year. The average sell price was around CA$0.50. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of CA$0.33. You can see the insider transactions (by individuals) over the last year depicted in the chart 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 free list of companies. (Hint: insiders have been buying them).
Insiders at Benchmark Botanics Have Sold Stock Recently
The last three months saw significant insider selling at Benchmark Botanics. Specifically, insiders ditched CA$122k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Benchmark Botanics insiders own 27% of the company, worth about CA$13m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Benchmark Botanics Insiders?
Insiders sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’d think twice before buying! To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Benchmark Botanics 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.
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.