We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Precinct Properties New Zealand Limited (NZSE:PCT).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 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'.
The Last 12 Months Of Insider Transactions At Precinct Properties New Zealand
The Chief Executive Officer, Scott Pritchard, made the biggest insider sale in the last 12 months. That single transaction was for NZ$330k worth of shares at a price of NZ$1.71 each. That means that even when the share price was slightly below the current price of NZ$1.73, 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. This single sale was just 12% of Scott Pritchard's stake. Scott Pritchard was the only individual insider to sell over the last year.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Precinct Properties New Zealand Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Precinct Properties New Zealand insiders own 0.3% of the company, worth about NZ$6.5m. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At Precinct Properties New Zealand Tell Us?
It doesn't really mean much that no insider has traded Precinct Properties New Zealand shares in the last quarter. We don't take much encouragement from the transactions by Precinct Properties New Zealand insiders. 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 Precinct Properties New Zealand. Our analysis shows 3 warning signs for Precinct Properties New Zealand (1 can't be ignored!) and we strongly recommend you look at these before investing.
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.
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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