We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Sophos Group plc (LON:SOPH).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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’.
Sophos Group Insider Transactions Over The Last Year
Stephen Munford made the biggest insider sale in the last 12 months. That single transaction was for UK£2.2m worth of shares at a price of UK£5.61 each. That is hardly a positive sign, even though it took place above the latest price (UK£3.10). So it is hard to draw any strong conclusion from it.
Over the last year, we note insiders sold 707.18k shares worth UK£4.0m. All up, insiders sold more shares in Sophos Group than they bought, over the last year. The sellers received a price of around US$5.69, on average. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (UK£3.10), so it probably doesn’t tell us a lot about the value on offer today. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Sophos Group
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Sophos Group insiders own 19% of the company, currently worth about UK£281m based on the recent share price. 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 Do The Sophos Group Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Sophos Group shares in the last quarter. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Sophos Group insider transactions don’t fill us with confidence. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
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