We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Barings BDC, Inc. (NYSE:BBDC).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
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. 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 Barings BDC
Over the last year, we can see that the biggest insider purchase was by insider Roger Crandall for US$120k worth of shares, at about US$6.84 per share. That implies that an insider found the current price of US$8.06 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. 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. Happily, the Barings BDC insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 74.11k shares worth US$570k. But insiders sold 500.00 shares worth US$3.4k. Overall, Barings BDC insiders were net buyers during the last year. The average buy price was around US$7.69. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. 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!
Barings BDC is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests Barings BDC insiders own 0.4% of the company, worth about US$1.7m. I generally like to see higher levels of ownership.
What Might The Insider Transactions At Barings BDC Tell Us?
The fact that there have been no Barings BDC insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Barings BDC insiders are doubting the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Barings BDC. Our analysis shows 2 warning signs for Barings BDC (1 shouldn't be ignored!) and we strongly recommend you look at these before investing.
Of course Barings BDC 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.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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