Don't Ignore The Fact That This Insider Just Sold Some Shares In AJ Bell plc (LON:AJB)

We wouldn't blame AJ Bell plc (LON:AJB) shareholders if they were a little worried about the fact that Charles Galbraith, the Member of the Management Board & MD of AJ Bell Youinvest recently netted about UK£2.2m selling shares at an average price of UK£4.35. That's a big disposal, and it decreased their holding size by 20%, which is notable but not too bad.

See our latest analysis for AJ Bell

The Last 12 Months Of Insider Transactions At AJ Bell

The CEO, Member of the Management Board & Director, Andrew Bell, made the biggest insider sale in the last 12 months. That single transaction was for UK£23m worth of shares at a price of UK£4.20 each. That means that even when the share price was below the current price of UK£4.31, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 5.3% of Andrew Bell's holding.

In the last twelve months insiders purchased 20.67k shares for UK£69k. On the other hand they divested 13.28m shares, for UK£56m. In total, AJ Bell insiders sold more than they bought over the last year. They sold for an average price of about UK£4.23. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of AJ Bell

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. AJ Bell insiders own 28% of the company, currently worth about UK£501m 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 AJ Bell Insiders?

Insiders sold AJ Bell shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that AJ Bell is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that AJ Bell has 1 warning sign and it would be unwise to ignore this.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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. 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.
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