It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Brooks Macdonald Group plc (LON:BRK), you may well want to know whether insiders have been buying or selling.
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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
See our latest analysis for Brooks Macdonald Group
Brooks Macdonald Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Christopher Anthony MacDonald sold UK£69k worth of shares at a price of UK£18.45 per share. So what is clear is that an insider saw fit to sell at around the current price of UK£16.15. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at that price.
All up, insiders sold more shares in Brooks Macdonald Group than they bought, over the last year. The average sell price was around UK£18.67. It’s not particularly great to see insiders were selling shares around current prices (shares recently traded at UK£16.15). Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Brooks Macdonald 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.
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. We usually like to see fairly high levels of insider ownership. It’s good to see that Brooks Macdonald Group insiders own 6.0% of the company, worth about UK£17m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Brooks Macdonald Group Insiders?
It doesn’t really mean much that no insider has traded Brooks Macdonald Group shares in the last quarter. Our analysis of Brooks Macdonald Group insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. Of course, the future is what matters most. So if you are interested in Brooks Macdonald Group, you should check out this free report on analyst forecasts for the company.
But note: Brooks Macdonald 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.
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 editorial-team@simplywallst.com.