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 we’ll take a look at whether insiders have been buying or selling shares in Hunting plc (LON:HTG).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
The Last 12 Months Of Insider Transactions At Hunting
In the last twelve months, the biggest single sale by an insider was when J Trafford sold UK£551k worth of shares at a price of UK£7.88 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is UK£5.81. So it may not tell us anything about how insiders feel about the current share price. J Trafford was the only individual insider to sell over the last year.
Happily, we note that in the last year insiders paid UK£107k for 13.50k shares. But they sold 70.00k for UK£551k. You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Hunting insiders own about UK£47m worth of shares. That equates to 4.0% 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 Do The Hunting Insider Transactions Indicate?
An insider haven’t bought Hunting stock in the last three months, but they sure did sell some. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. When you combine this with the relatively low insider ownership, we are very cautious about the stock. We’d certainly think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Hunting.
But note: Hunting 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 email@example.com.