We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Nanoco Group plc (LON:NANO).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Nanoco Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Richard Griffiths, sold UK£596k worth of shares at a price of UK£0.14 per share. So what is clear is that an insider saw fit to sell at around the current price of UK£0.12. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive). Richard Griffiths was the only individual insider to sell shares in the last twelve months. Notably Richard Griffiths was also the biggest buyer, having purchased UK£1.1m worth of shares.
Happily, we note that in the last year insiders paid UK£1.1m for 7.23m shares. On the other hand they divested 4.54m shares, for UK£629k. In the last twelve months there was more buying than selling by Nanoco Group insiders. The average buy price was around UK£0.16. These transactions suggest that insiders have considered the current price attractive. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Nanoco Group Have Bought Stock Recently
We saw some Nanoco Group insider buying shares in the last three months. Independent Non-Executive Chairman Christopher G. Richards shelled out UK£9.5k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Does Nanoco Group Boast High Insider Ownership?
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. It appears that Nanoco Group insiders own 17% of the company, worth about UK£6.1m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Nanoco Group Tell Us?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Nanoco Group and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 5 warning signs for Nanoco Group (1 is potentially serious!) and we strongly recommend you look at these before investing.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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