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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of British American Tobacco p.l.c. (LON:BATS), it sends a favourable message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for British American Tobacco
The Last 12 Months Of Insider Transactions At British American Tobacco
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Karen Guerra bought UK£99k worth of shares at a price of UK£23.80 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£29.68. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
British American Tobacco insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and 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 undervalued small cap companies that insiders are buying.
Does British American Tobacco Boast High 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. It's great to see that British American Tobacco insiders own 10% of the company, worth about UK£6.8b. 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 British American Tobacco Tell Us?
It doesn't really mean much that no insider has traded British American Tobacco shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, British American Tobacco insiders feel good about the company's future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 2 warning signs for British American Tobacco that deserve your attention before buying any shares.