RMG) Insiders Have Been Buying Shares – Simply Wall St News

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 Royal Mail plc (LON:RMG), 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.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

See our latest analysis for Royal Mail

The Last 12 Months Of Insider Transactions At Royal Mail

In the last twelve months, the biggest single purchase by an insider was when Group CEO & Director Rico Back bought UK£415k worth of shares at a price of UK£2.08 per share. So it’s clear an insider wanted to buy, at around the current price, which is UK£2.22. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. Happily, the Royal Mail insider decided to buy shares at close to current prices. Rico Back was the only individual insider to buy over the year.

Rico Back bought a total of 450000 shares over the year at an average price of UK£2.03. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data suggests Royal Mail insiders own 0.1% of the company, worth about UK£2.8m. I generally like to see higher levels of ownership.

What Might The Insider Transactions At Royal Mail Tell Us?

It doesn’t really mean much that no insider has traded Royal Mail shares in the last quarter. However, our analysis of transactions over the last year is heartening. The transactions are fine but it’d be more encouraging if Royal Mail insiders bought more shares in the company. Of course, the future is what matters most. So if you are interested in Royal Mail, you should check out this free report on analyst forecasts for the company.

But note: Royal Mail 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.

These great dividend stocks are beating your savings account

Not only have these stocks been reliable dividend payers for the last 10 years but with the yield over 3% they are also easily beating your savings account (let alone the possible capital gains). Click here to see them for FREE on Simply Wall St.