We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Hornby PLC (LON:HRN).
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.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Hornby Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Lyndon Davies bought UK£71k worth of shares at a price of UK£0.36 per share. We do like to see buying, but this purchase was made at well below the current price of UK£0.55. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
In the last twelve months Hornby insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our information indicates that Hornby insiders own about UK£535k worth of shares. We might be missing something but that seems like very low insider ownership.
So What Do The Hornby Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Hornby shares in the last quarter. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Hornby insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Hornby. At Simply Wall St, we found 2 warning signs for Hornby that deserve your attention before buying any shares.
But note: Hornby 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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Hornby PLC, through its subsidiaries, engages in the design, development, sourcing, and distribution of hobby and interactive products in the United Kingdom, the United State, Spain, Italy, and rest of Europe.
Adequate balance sheet and slightly overvalued.