We wouldn't blame Associated British Foods plc (LON:ABF) shareholders if they were a little worried about the fact that George Weston, the CEO & Executive Director recently netted about UK£10m selling shares at an average price of UK£23.05. That sale reduced their total holding by 13% which is hardly insignificant, but far from the worst we've seen.
The Last 12 Months Of Insider Transactions At Associated British Foods
Notably, that recent sale by George Weston is the biggest insider sale of Associated British Foods shares that we've seen in the last year. So what is clear is that an insider saw fit to sell at around the current price of UK£22.64. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
Over the last year, we can see that insiders have bought 12.00k shares worth UK£223k. On the other hand they divested 652.43k shares, for UK£15m. George Weston divested 652.43k shares over the last 12 months at an average price of UK£22.96. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Does Associated British Foods Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Associated British Foods insiders own 0.6% of the company, currently worth about UK£107m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Associated British Foods Tell Us?
The insider sales have outweighed the insider buying, at Associated British Foods, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing 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. While conducting our analysis, we found that Associated British Foods has 3 warning signs and it would be unwise to ignore them.
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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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