We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Direct Line Insurance Group plc (LON:DLG).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Direct Line Insurance Group Insider Transactions Over The Last Year
The Chief Operating Officer, Steven Maddock, made the biggest insider sale in the last 12 months. That single transaction was for UK£484k worth of shares at a price of UK£2.91 each. So what is clear is that an insider saw fit to sell at around the current price of UK£2.83. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Direct Line Insurance Group insiders didn't buy any shares over the last year. 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).
Insiders at Direct Line Insurance Group Have Sold Stock Recently
The last quarter saw substantial insider selling of Direct Line Insurance Group shares. In total, insiders dumped UK£1.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Direct Line Insurance Group
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Based on our data, Direct Line Insurance Group insiders have about 0.08% of the stock, worth approximately UK£3.0m. We prefer to see high levels of insider ownership.
So What Do The Direct Line Insurance Group Insider Transactions Indicate?
Insiders sold Direct Line Insurance Group shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. So we'd only buy after very careful consideration. 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. In terms of investment risks, we've identified 2 warning signs with Direct Line Insurance Group and understanding them should be part of your investment process.
Of course Direct Line Insurance Group 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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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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