Insider Buying: The Volex plc (LON:VLX) Executive Chairman Just Bought US$253k Worth Of Shares

By
Simply Wall St
Published
November 21, 2020
AIM:VLX

Potential Volex plc (LON:VLX) shareholders may wish to note that the Executive Chairman, Nathaniel Philip Victor Rothschild, recently bought UK£253k worth of stock, paying UK£2.53 for each share. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.

View our latest analysis for Volex

The Last 12 Months Of Insider Transactions At Volex

In fact, the recent purchase by Executive Chairman Nathaniel Philip Victor Rothschild was not their only acquisition of Volex shares this year. Earlier in the year, they paid UK£1.65 per share in a UK£825k purchase. We do like to see buying, but this purchase was made at well below the current price of UK£2.85. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid UK£1.7m for 1.14m shares. But they sold 139.21k shares for UK£206k. Overall, Volex insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
AIM:VLX Insider Trading Volume November 21st 2020

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Volex

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Volex insiders own 27% of the company, currently worth about UK£115m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Volex Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Volex insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Volex and understanding these should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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