Yahoo Finanza Should You Take Comfort From Insider Transactions At Scapa Group plc (LON:SCPA)?
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 before you buy or sell Scapa Group plc (LON:SCPA), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Check out our latest analysis for Scapa Group
The Last 12 Months Of Insider Transactions At Scapa Group
Over the last year, we can see that the biggest insider purchase was by Group CEO & President of Industrial Heejae Chae for UK£150k worth of shares, at about UK£1.05 per share. That means that an insider was happy to buy shares at above the current price of UK£0.96. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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.
In the last twelve months Scapa Group insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Scapa Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Scapa Group Insiders Bought Stock Recently
It's good to see that Scapa Group insiders have made notable investments in the company's shares. In total, insiders bought UK£355k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Scapa Group insiders have about 0.8% of the stock, worth approximately UK£1.4m. We consider this fairly low insider ownership.
What Might The Insider Transactions At Scapa Group Tell Us?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Scapa Group insiders are reasonably well aligned, and optimistic for the future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that Scapa Group is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...
But note: Scapa Group 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.
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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