Stock Analysis

Insiders Re-Evaluate Their UK£466k Stock Purchase As Cornerstone FS Falls To UK£3.7m \

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AIM:CSFS
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The recent price decline of 10% in Cornerstone FS plc's (LON:CSFS) stock may have disappointed insiders who bought UK£466k worth of shares at an average price of UK£0.099 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth UK£307k, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Cornerstone FS

Cornerstone FS Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Robert O'Brien for UK£429k worth of shares, at about UK£0.10 per share. That means that even when the share price was higher than UK£0.065 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months insiders purchased 4.72m shares for UK£466k. But insiders sold 205.30k shares worth UK£17k. In total, Cornerstone FS insiders bought more than they sold over the last year. 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!

insider-trading-volume
AIM:CSFS Insider Trading Volume May 5th 2023

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.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Cornerstone FS insiders own 61% of the company, currently worth about UK£2.3m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Cornerstone FS Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Cornerstone FS insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cornerstone FS. At Simply Wall St, we've found that Cornerstone FS has 6 warning signs (2 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

Of course Cornerstone FS may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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Find out whether Cornerstone FS is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.