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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell discoverIE Group plc (LON:DSCV), 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’.
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discoverIE Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Group Chief Executive & Director Nicholas Jefferies for UK£1.7m worth of shares, at about UK£4.22 per share. So what is clear is that an insider saw fit to sell at around the current price of UK£3.90. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
Over the last year, we can see that insiders have bought 13.36k shares worth UK£50k. But insiders sold 593.04k shares worth UK£2.5m. Over the last year we saw more insider selling of discoverIE Group shares, than buying. The sellers received a price of around UK£4.22, on average. It’s not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. 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!
discoverIE Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.