Selling UK£1.3m worth of DS Smith Plc (LON:SMDS) stock at high prices would have gotten insiders a handsome reward

Simply Wall St
March 18, 2022
Source: Shutterstock

Despite the fact that DS Smith Plc (LON:SMDS) stock rose 9.0% last week, insiders who sold UK£1.3m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of UK£4.38, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for DS Smith

The Last 12 Months Of Insider Transactions At DS Smith

The Group Finance Director & Executive Director, Adrian R. Marsh, made the biggest insider sale in the last 12 months. That single transaction was for UK£1.3m worth of shares at a price of UK£4.42 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (UK£3.37). So it may not tell us anything about how insiders feel about the current share price. Adrian R. Marsh was the only individual insider to sell over the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

LSE:SMDS Insider Trading Volume March 18th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does DS Smith 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that DS Smith insiders own 0.2% of the company, worth about UK£9.1m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About DS Smith Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. The insider transactions at DS Smith are not inspiring us to buy. And we're not picking up on high enough insider ownership to give us any comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing DS Smith. While conducting our analysis, we found that DS Smith has 1 warning sign and it would be unwise to ignore it.

But note: DS Smith 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.