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 before you buy or sell Brickworks Limited (ASX:BKW), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 Brickworks
In the last twelve months, the biggest single purchase by an insider was when MD & Executive Director Lindsay Partridge bought AU$915k worth of shares at a price of AU$16.92 per share. That means that an insider was happy to buy shares at above the current price of AU$16.33. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Lindsay Partridge was also the biggest seller, having sold AU$892k worth of shares.
In the last twelve months insiders purchased 115k shares for AU$1.9m. On the other hand they divested 52000 shares, for AU$892k. In the last twelve months there was more buying than selling by Brickworks insiders. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Brickworks Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Brickworks. In that time, Non-Executive Director Brendan Crotty dumped AU$214k worth of shares. On the other hand we note Independent Non-Executive Director Deborah Page bought AU$19k worth of shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Brickworks insiders own 4.1% of the company, worth about AU$100m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Brickworks Tell Us?
Unfortunately, there has been more insider selling of Brickworks stock, than buying, in the last three months. On the other hand, the insider transactions over the last year are encouraging. And insider ownership remains quite considerable. So we're not too bothered by recent selling. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Brickworks.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.