Insiders At Coca-Cola HBC Sold €5.7m In Stock, Alluding To Potential Weakness

The fact that multiple Coca-Cola HBC AG (LON:CCH) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Coca-Cola HBC

Coca-Cola HBC Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Chief Corporate Development Officer, Jan Gustavsson, sold UK£750k worth of shares at a price of UK£25.00 per share. That means that even when the share price was below the current price of UK£27.38, 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. It is worth noting that this sale was only 21% of Jan Gustavsson's holding.

All up, insiders sold more shares in Coca-Cola HBC than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Coca-Cola HBC Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Coca-Cola HBC shares over the last three months. We note insiders cashed in UK£1.7m worth of shares. On the other hand we note Independent Non-Executive Director Charlotte Boyle bought UK£11k worth of shares , as previously mentioned . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Coca-Cola HBC

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.7% of Coca-Cola HBC shares, worth about UK£74m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Coca-Cola HBC Insiders?

The insider sales have outweighed the insider buying, at Coca-Cola HBC, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! 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. While conducting our analysis, we found that Coca-Cola HBC has 2 warning signs and it would be unwise to ignore these.

But note: Coca-Cola HBC 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.