Stock Analysis

Need To Know: Ultra Electronics Holdings plc (LON:ULE) Insiders Have Been Buying Shares

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LSE:ULE
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Ultra Electronics Holdings plc (LON:ULE), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.

See our latest analysis for Ultra Electronics Holdings

Ultra Electronics Holdings Insider Transactions Over The Last Year

The Chairman of the Board William Rice made the biggest insider purchase in the last 12 months. That single transaction was for UK£119k worth of shares at a price of UK£23.75 each. That means that an insider was happy to buy shares at above the current price of UK£20.62. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Ultra Electronics Holdings insiders bought shares during the last year, they didn't sell. The average buy price was around UK£21.01. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
LSE:ULE Insider Trading Volume December 16th 2020

Ultra Electronics Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Ultra Electronics Holdings

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Ultra Electronics Holdings insiders own 0.1% of the company, worth about UK£1.5m. We consider this fairly low insider ownership.

What Might The Insider Transactions At Ultra Electronics Holdings Tell Us?

It doesn't really mean much that no insider has traded Ultra Electronics Holdings shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. We'd like to see bigger individual holdings. However, we don't see anything to make us think Ultra Electronics Holdings insiders are doubting the company. Of course, the future is what matters most. So if you are interested in Ultra Electronics Holdings, you should check out this free report on analyst forecasts for the company.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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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