We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Daily Journal Corporation (NASDAQ:DJCO).
Do Insider Transactions Matter?
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, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Daily Journal Insider Transactions Over The Last Year
The Vice Chairman, Gerald Salzman, made the biggest insider sale in the last 12 months. That single transaction was for US$2.8m worth of shares at a price of US$332 each. That means that an insider was selling shares at around the current price of US$324. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Gerald Salzman was the only individual insider to sell over the last year.
Gerald Salzman ditched 31.64k shares over the year. The average price per share was US$298. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Daily Journal
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Daily Journal insiders own about US$107m worth of shares (which is 24% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Daily Journal Tell Us?
It doesn't really mean much that no insider has traded Daily Journal shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Daily Journal insiders selling. 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. At Simply Wall St, we found 1 warning sign for Daily Journal that deserve your attention before buying any shares.
But note: Daily Journal 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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