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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Carnival plc (LON:CCL).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Carnival
In the last twelve months, the biggest single sale by an insider was when the Group Chief Executive Officer of Costa Group & Carnival Asia, Michael Thamm, sold UK£2.0m worth of shares at a price of UK£43.31 per share. That means that an insider was selling shares at around the current price of UK£39.49. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last twelve months insiders netted UK£2.1m for 48580 shares sold. Carnival insiders didn’t buy any shares over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Carnival better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Carnival
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Carnival insiders own about UK£7.5m worth of shares (which is 0.03% of the company). Whilst better than nothing, we’re not overly impressed by these holdings.
So What Do The Carnival Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. The insider transactions at Carnival are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Carnival.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.