Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of S4 Capital plc (LON:SFOR), that sends out a positive message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
S4 Capital Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Paul Roy for UK£405k worth of shares, at about UK£5.06 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£1.96). 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. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. We note that Paul Roy was both the biggest buyer and the biggest seller.
In the last twelve months insiders purchased 407.70k shares for UK£1.0m. But insiders sold 80.00k shares worth UK£402k. In total, S4 Capital insiders bought more than they sold over the last year. The average buy price was around UK£2.54. I'd consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
S4 Capital is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
S4 Capital Insiders Bought Stock Recently
It's good to see that S4 Capital insiders have made notable investments in the company's shares. In total, insiders bought UK£341k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that S4 Capital insiders own 17% of the company, worth about UK£189m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About S4 Capital Insiders?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest S4 Capital insiders are well aligned, and quite possibly think the share price is too low. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with S4 Capital and understanding them should be part of your investment process.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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