We note that the Forterra plc (LON:FORT) CFO & Director, Benjamin Guyatt, recently sold UK£66k worth of stock for UK£2.86 per share. It wasn't a huge sale, but it did reduce their holding by 40%. This does not instill confidence.
The Last 12 Months Of Insider Transactions At Forterra
In the last twelve months, the biggest single sale by an insider was when the CEO & Executive Director, Stephen Harrison, sold UK£209k worth of shares at a price of UK£2.48 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£2.89. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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 23% of Stephen Harrison's holding.
Over the last year, we can see that insiders have bought 56.61k shares worth UK£123k. On the other hand they divested 168.47k shares, for UK£435k. All up, insiders sold more shares in Forterra than they bought, over the last year. The sellers received a price of around UK£2.58, on average. It's not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Forterra better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Forterra
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Forterra insiders have about 0.2% of the stock, worth approximately UK£1.3m. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At Forterra Tell Us?
The stark truth for Forterra is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. 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. Case in point: We've spotted 2 warning signs for Forterra you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.
When trading Forterra or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.