Potential NEXT plc (LON:NXT) shareholders may wish to note that the Independent Non-Executive Chairman, Michael Roney, recently bought UK£275k worth of stock, paying UK£78.47 for each share. Although the purchase only increased their holding by 8.6%, it is still a solid purchase in our view.
The Last 12 Months Of Insider Transactions At NEXT
The CEO & Executive Director, Simon Wolfson, made the biggest insider sale in the last 12 months. That single transaction was for UK£10m worth of shares at a price of UK£67.87 each. That means that an insider was selling shares at slightly below the current price (UK£78.82). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 Simon Wolfson's stake.
All up, insiders sold more shares in NEXT than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. NEXT insiders own about UK£110m worth of shares (which is 1.1% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At NEXT Tell Us?
The insider sales have outweighed the insider buying, at NEXT, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing NEXT. In terms of investment risks, we've identified 4 warning signs with NEXT and understanding them should be part of your investment process.
Of course NEXT may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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