Have Insiders Been Selling SSE plc (LON:SSE) Shares?

By
Simply Wall St
Published
May 26, 2021
LSE:SSE
Source: Shutterstock

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 SSE plc (LON:SSE).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 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'.

Check out our latest analysis for SSE

The Last 12 Months Of Insider Transactions At SSE

The CEO & Executive Director, Alistair Phillips-Davies, made the biggest insider sale in the last 12 months. That single transaction was for UK£423k worth of shares at a price of UK£13.75 each. That means that even when the share price was below the current price of UK£15.42, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 23% of Alistair Phillips-Davies's holding.

In the last year SSE insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
LSE:SSE Insider Trading Volume May 27th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does SSE 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. A high insider ownership often makes company leadership more mindful of shareholder interests. SSE insiders own about UK£8.8m worth of shares. That equates to 0.06% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The SSE Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of SSE insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing SSE. Every company has risks, and we've spotted 4 warning signs for SSE (of which 1 can't be ignored!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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