https://finance.yahoo.com/news/insiders ... 49046.html
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 Royal Mail plc (LON:RMG).
What Is Insider Selling?
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, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.
View our latest analysis for Royal Mail
The Last 12 Months Of Insider Transactions At Royal Mail https://simplywall.st/stocks/gb/transpo ... nt=1266100
In the last twelve months, the biggest single purchase by an insider was when Executive Officer Rico Back bought UK£702k worth of shares at a price of UK£2.34 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£1.65). 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 encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Rico Back.
Rico Back bought a total of 600.00k shares over the year at an average price of UK£2.07. 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!
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. Royal Mail insiders own about UK£138m worth of shares (which is 8.4% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Royal Mail Tell Us?
The fact that there have been no Royal Mail insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Royal Mail insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Royal Mail has 1 warning sign https://simplywall.st/stocks/gb/transpo ... ve-summary
we think you should be aware of.