Insiders Buying Capita Might Wish They Invested More, Stock Gains 34%

Capita plc (LON:CPI) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 34%, resulting in a UK£82m rise in the company's market capitalisation, translating to a gain of 26% on their initial investment. As a result, the stock they originally bought for UK£379.6k is now worth UK£476.6k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Capita

Capita Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Officer Jonathan Lewis for UK£94k worth of shares, at about UK£0.17 per share. Even though the purchase was made at a significantly lower price than the recent price (UK£0.19), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Capita insiders bought shares during the last year, they didn't sell. 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!

Capita is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At Capita Have Bought Stock Recently

Over the last quarter, Capita insiders have spent a meaningful amount on shares. We can see that insider Pablo Andres paid UK£89k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Does Capita Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data isn't picking up on much insider ownership at Capita, though insiders do hold about UK£514k worth of shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.

What Might The Insider Transactions At Capita Tell Us?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Capita stock. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Capita has 2 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

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 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com