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 shareholders might well want to know whether insiders have been buying or selling shares in Sophos Group plc (LON:SOPH).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Sophos Group
Independent Non-Executive Director Vinodka Murria made the biggest insider sale in the last 12 months. That single transaction was for UK£2.4m worth of shares at a price of UK£5.39 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of UK£3.62. So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders netted UK£6.5m for 1.16m shares sold. Over the last year we saw more insider selling of Sophos Group shares, than buying. The sellers received a price of around US$5.57, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is UK£3.62). You can see the insider transactions over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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. We usually like to see fairly high levels of insider ownership. Sophos Group insiders own about UK£408m worth of shares (which is 19% of the company). 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?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. We don’t take much encouragement from the transactions by Sophos Group insiders. But it’s good to see that insiders own shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Sophos Group.
Of course Sophos Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.