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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 Spirax-Sarco Engineering plc (LON:SPX).
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 on the market. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Spirax-Sarco Engineering
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board James Robert Pike for UK£200k worth of shares, at about UK£70.02 per share. That implies that an insider found the current price of UK£87.00 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Spirax-Sarco Engineering share holders is that insiders were buying at near the current price.
In the last twelve months insiders paid UK£259k for 3756 shares purchased. In the last twelve months Spirax-Sarco Engineering insiders were buying shares, but not selling. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Spirax-Sarco Engineering is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Spirax-Sarco Engineering
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.2% of Spirax-Sarco Engineering shares, worth about UK£10m. 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 Do The Spirax-Sarco Engineering Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Spirax-Sarco Engineering shares in the last quarter. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Spirax-Sarco Engineering insiders are doubting the company, and they do own shares. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Spirax-Sarco Engineering.
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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.