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 we’ll take a look at whether insiders have been buying or selling shares in St. Modwen Properties PLC (LON:SMP).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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’.
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St. Modwen Properties Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Director Mark Allan bought UK£149k worth of shares at a price of UK£4.13 per share. That means that an insider was happy to buy shares at around the current price of UK£4.28. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it’s a good sign on balance, but keep in mind they may no longer see value. The good news for St. Modwen Properties share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 58448 shares worth UK£239k. While St. Modwen Properties insiders bought shares last year, they didn’t sell. The chart below shows insider transactions (by 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at St. Modwen Properties Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at St. Modwen Properties. Overall, two insiders shelled out UK£239k for shares in the company — and none sold. That shows some optimism about the company’s future.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that St. Modwen Properties insiders own 11% of the company, worth about UK£104m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About St. Modwen Properties Insiders?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest St. Modwen Properties insiders are well aligned, and quite possibly think the share price is too low. That’s what I like to see! Of course, the future is what matters most. So if you are interested in St. Modwen Properties, you should check out this free report on analyst forecasts for the company.
Of course St. Modwen Properties may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.