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 shareholders might well want to know whether insiders have been buying or selling shares in Leon’s Furniture Limited (TSE:LNF).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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 Leon’s Furniture
In the last twelve months, the biggest single purchase by an insider was when Chairman Mark Leon bought CA$148k worth of shares at a price of CA$14.81 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders purchased 31.40k shares for CA$477k. But they sold 11.90k for CA$190k. In total, Leon’s Furniture insiders bought more than they sold over the last year. The average buy price was around CA$15.19. These transactions suggest that insiders have considered the current price of CA$14.69 attractive. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Leon’s Furniture is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Leon’s Furniture Have Bought Stock Recently
There was some insider buying at Leon’s Furniture over the last quarter. In total, insiders bought CA$163k worth of shares in that time. On the other hand, Terrence Leon sold CA$99k worth of shares. It is nice to see that insiders have bought, but the quantum isn’t large enough to get us excited.
Insider Ownership of Leon’s Furniture
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 3.5% of Leon’s Furniture shares, worth about CA$40m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Leon’s Furniture Tell Us?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of Leon’s Furniture we think they are probably pretty confident of a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Leon’s Furniture 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.