Smart Metering Systems Insiders Added UK£448k Of Stock To Their Holdings

Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Smart Metering Systems plc (LON:SMS), it sends a favourable message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Smart Metering Systems

The Last 12 Months Of Insider Transactions At Smart Metering Systems

Notably, that recent purchase by CEO & Executive Director Timothy Mortlock was not the only time they bought Smart Metering Systems shares this year. They previously made an even bigger purchase of UK£120k worth of shares at a price of UK£7.45 per share. That means that even when the share price was higher than UK£5.77 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

While Smart Metering Systems insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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).

Smart Metering Systems Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Smart Metering Systems. Specifically, CEO & Executive Director Timothy Mortlock bought UK£50k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Smart Metering Systems insiders own 3.9% of the company, worth about UK£33m. 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 Do The Smart Metering Systems Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Smart Metering Systems and we see no evidence to suggest they are worried about the future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Smart Metering Systems has 2 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

But note: Smart Metering Systems 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.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.