It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in The Restaurant Group plc (LON:RTN).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
Check out our latest analysis for Restaurant Group
The Last 12 Months Of Insider Transactions At Restaurant Group
Over the last year, we can see that the biggest insider purchase was by CEO & Director Andy McCue for UK£114k worth of shares, at about UK£2.54 per share. That means that an insider was happy to buy shares at above the current price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Over the last year, we can see that insiders have bought 84.81k shares worth UK£172k. But insiders sold 2.29k shares worth UK£6.6k. In the last twelve months there was more buying than selling by Restaurant Group insiders. The average buy price was around UK£2.03. This is nice to see since it implies that insiders might see value around current prices (around UK£1.39). You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Restaurant Group
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. Our data suggests Restaurant Group insiders own 0.1% of the company, worth about UK£820k. We prefer to see high levels of insider ownership.