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 ABB Ltd (VTX:ABBN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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’.
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ABB Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when President & CEO Ulrich Spiesshofer bought CHF2.3m worth of shares at a price of CHF22.73 per share. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices.
Happily, we note that in the last year insiders bought 442.77k shares for a total of CHF9.9m. In total, ABB insiders bought more than they sold over the last year. The average buy price was around CHF22.42. I’d consider this a positive as it suggests insiders see value at around the current price, which is CHF19.02. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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 ABB Have Bought Stock Recently
It’s good to see that ABB insiders have made notable investments in the company’s shares. Chief Human Resources Officer Jean-Christophe Deslarzes spent US$906k on stock, and there wasn’t any selling. This could be interpreted as suggesting a positive outlook.
Insider Ownership of ABB
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 0.1% of ABB shares, worth about CHF51m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At ABB Tell Us?
It is good to see recent insider purchase. And the longer term insider transactions also give us confidence. Insiders likely see value in ABB shares, given these transactions (along with notable insider ownership of the company). 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.