While DWF Group plc (LON:DWF) shareholders have had a good week with the stock up 11%, they shouldn't let their guards down. The fact that insiders chose to dispose of UK£604k worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
DWF Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Partner Director and Head of Diversity & Inclusion Leadership Group, Seema Bains, for UK£268k worth of shares, at about UK£1.02 per share. That means that even when the share price was below the current price of UK£1.27, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 16% of Seema Bains's stake.
DWF Group insiders didn't buy any shares over the last year. 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!
I will like DWF Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does DWF Group Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that DWF Group insiders own 3.4% of the company, worth about UK£13m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About DWF Group Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of DWF Group insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that DWF Group has 2 warning signs and it would be unwise to ignore them.
But note: DWF Group 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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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.