We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Aggreko Plc (LON:AGK), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
The Last 12 Months Of Insider Transactions At Aggreko
The insider, Alastair Eric Salvesen, made the biggest insider sale in the last 12 months. That single transaction was for UK£218k worth of shares at a price of UK£8.70 each. That means that an insider was selling shares at around the current price of UK£8.12. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive). Alastair Eric Salvesen was the only individual insider to sell shares in the last twelve months.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Aggreko Insiders Are Selling The Stock
The last three months saw significant insider selling at Aggreko. In total, insider Alastair Eric Salvesen sold UK£218k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership of Aggreko
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. From looking at our data, insiders own UK£1.4m worth of Aggreko stock, about 0.07% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.
What Might The Insider Transactions At Aggreko Tell Us?
An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. So we'd only buy after very careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Aggreko. Our analysis shows 4 warning signs for Aggreko (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.
But note: Aggreko 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, but not derivative transactions.
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