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 before you buy or sell Marshalls plc (LON:MSLH), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
Marshalls Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the CEO & Executive Director, Martyn Coffey, sold UK£1.1m worth of shares at a price of UK£7.05 per share. That means that an insider was selling shares at slightly below the current price (UK£7.47). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 30% of Martyn Coffey's stake. Notably Martyn Coffey was also the biggest buyer, having purchased UK£152 worth of shares.
All up, insiders sold more shares in Marshalls 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 growing companies that insiders are buying.
Does Marshalls Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Marshalls insiders have about 0.2% of the stock, worth approximately UK£3.1m. We consider this fairly low insider ownership.
So What Do The Marshalls Insider Transactions Indicate?
The fact that there have been no Marshalls insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Marshalls insiders. And we're not picking up on high enough insider ownership to give us any comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Marshalls is showing 3 warning signs in our investment analysis, and 1 of those is potentially serious...
But note: Marshalls 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, but not derivative transactions.
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