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Fuller, Smith & Turner P.L.C. operates managed pubs and hotels in the United Kingdom. Fuller Smith & Turner is one of United Kingdom’s small-cap stocks that saw some insider selling over the past three months, with insiders divesting from 14.39k shares during this period. It is widely considered that insider selling stock in their own companies is potentially a bearish signal. A research published in The MIT Press (1998) concluded that stocks following insider selling fell 2.7% compared to the market. However, these signals may not be enough to gain conviction on whether to divest. I will be analysing whether these selling activities are supported by favourable future outlook and recent share price volatility.
View our latest analysis for Fuller Smith & Turner
Which Insiders Are Selling?
More shares have been sold than bought by Fuller Smith & Turner’s insiders in the past three months. In total, individual insiders own over 12.45 million shares in the business, which makes up around 22.94% of total shares outstanding. The following insiders have recently reduced their company holdings: J. Emeny (management and board member) , James Douglas (management and board member) , Jonathon Swaine (management and board member) , Richard Fuller (management and board member) and Simon Dodd (management and board member) .
Is This Consistent With Future Growth?
At first glance, analysts’ earnings expectations of 8.1% over the next three years illustrates a moderated outlook moving forward. Insiders may be more cautious than the market as signalled by their net selling activity. Probing further into annual growth rates, Fuller Smith & Turner is expected to experience a rather subdued top-line growth over the next year, which is expected to negatively impact the bottom line, with a growth rate of -4.1%. This illustrates that cost growth has exceeded top-line, leading to an unsustainable decline in earnings. Insiders’ net selling activity seems to bolster this negative sentiment. Otherwise, they may simply view the current share price is well-above the intrinsic value, providing a prime time to sell.
Did Insiders Sell On Share Price Volatility?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. This means, if insiders believe shares were heavily undervalued recently, this would provide a prime opportunity to buy more irrespective of its growth outlook. Fuller Smith & Turner’s shares ranged between £9.9 and £9.24 over the past three months. This suggests a trivial share price movement, with a change of 7.14%. This may mean insiders’ motivation to trade may not be driven by the share price but rather other factors such as their belief in company growth or their personal portfolio diversification needs.