Cavendish's UK£3.0m Market Cap Fall Books Insider Losses

The recent price decline of 10% in Cavendish plc's (LON:CAV) stock may have disappointed insiders who bought UK£314.8k worth of shares at an average price of UK£0.089 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only UK£275.2k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Cavendish

Over the last year, we can see that the biggest insider purchase was by Co-CEO & Director Julian Morse for UK£255k worth of shares, at about UK£0.088 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.077). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. We note that Julian Morse was both the biggest buyer and the biggest seller.

Happily, we note that in the last year insiders paid UK£315k for 3.55m shares. On the other hand they divested 2.91m shares, for UK£255k. In the last twelve months there was more buying than selling by Cavendish insiders. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Cavendish

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders At Cavendish Have Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Cavendish. In total, two insiders bought UK£303k worth of shares in that time. But we did see Co-CEO & Director Julian Morse sell shares worth UK£255k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Cavendish 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. Cavendish insiders own about UK£7.6m worth of shares. That equates to 30% of the company. 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 Cavendish Insiders?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Cavendish insiders are doubting the company, and they do own shares. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 3 warning signs we've spotted with Cavendish (including 1 which is concerning) .

But note: Cavendish 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 of direct interests only, but not derivative transactions or indirect interests.

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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.