It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Sanford Limited (NZSE:SAN).
Do Insider Transactions Matter?
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 don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Sanford
Over the last year, we can see that the biggest insider sale was by the Executive Officer, Volker Kuntzsch, for NZ$325k worth of shares, at about NZ$8.13 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (NZ$4.94). So it is hard to draw any strong conclusion from it. Volker Kuntzsch was the only individual insider to sell over the last year.
Happily, we note that in the last year insiders paid NZ$213k for 41.00k shares. But they sold 40.00k shares for NZ$325k. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Sanford Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Sanford. Overall, two insiders shelled out NZ$206k for shares in the company -- and none sold. That shows some optimism about the company's future.
Does Sanford Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 8.6% of Sanford shares, worth about NZ$40m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Sanford Insiders?
The recent insider purchases are heartening. But we can't say the same for the transactions over the last 12 months. We don't take much heart from transactions by Sanford insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 2 warning signs for Sanford you should be aware of.
But note: Sanford may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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