We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Royal Mail plc (LON:RMG).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
The Last 12 Months Of Insider Transactions At Royal Mail
Group CEO & Director Rico Back made the biggest insider purchase in the last 12 months. That single transaction was for UK£415k worth of shares at a price of UK£2.08 each. That implies that an insider found the current price of UK£2.11 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. In this case we’re pleased to report that the insider purchases were made at close to current prices.
In the last twelve months insiders paid UK£1.2m for 528k shares purchased. While Royal Mail insiders bought shares last year, they didn’t sell. You can see the insider transactions (by 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!
Insiders at Royal Mail Have Bought Stock Recently
It’s good to see that Royal Mail insiders have made notable investments in the company’s shares. We can see that Rico Back paid UK£913k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Royal Mail insiders have about 0.1% of the stock, worth approximately UK£2.6m. I generally like to see higher levels of ownership.
So What Does This Data Suggest About Royal Mail Insiders?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Royal Mail insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in Royal Mail, you should check out this free report on analyst forecasts for the company.
Of course Royal Mail 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.
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 firstname.lastname@example.org. 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.