We'd be surprised if Zotefoams plc (LON:ZTF) shareholders haven't noticed that the Group CEO, David Stirling, recently sold UK£222k worth of stock at UK£4.04 per share. The eyebrow raising move amounted to a reduction of 11% in their holding.
The Last 12 Months Of Insider Transactions At Zotefoams
Notably, that recent sale by David Stirling is the biggest insider sale of Zotefoams shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of UK£4.10. 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. 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 11% of David Stirling's stake.
In the last twelve months insiders purchased 11.94k shares for UK£41k. But insiders sold 55.00k shares worth UK£222k. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insider Ownership of Zotefoams
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 5.2% of Zotefoams shares, worth about UK£10m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Zotefoams Tell Us?
An insider hasn't bought Zotefoams stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 3 warning signs with Zotefoams and understanding them should be part of your investment process.
But note: Zotefoams 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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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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