It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Sportech PLC (LON:SPO).
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, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. 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.’
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Sportech Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Interim Executive Chairman Richard McGuire bought UK£143k worth of shares at a price of UK£0.57 per share. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders bought 625.00k shares for a total of UK£348k. Overall, Sportech insiders were net buyers last year. Their average price was about UK£0.56. I’d consider this a positive as it suggests insiders see value at around the current price, which is UK£0.38. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Sportech is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Sportech Have Bought Stock Recently
It’s good to see that Sportech insiders have made notable investments in the company’s shares. We can see that Richard McGuire paid UK£101k for shares in the company. No-one sold. That shows some optimism about the company’s future.
Does Sportech Boast High Insider Ownership?
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. Based on our data, Sportech insiders have about 1.7% of the stock, worth approximately UK£1.2m. However, it’s possible that insiders might have an indirect interest through a more complex structure. I generally like to see higher levels of ownership.
What Might The Insider Transactions At Sportech Tell Us?
It’s certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little 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 Sportech stock. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.