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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Babcock International Group PLC (LON:BAB), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
See our latest analysis for Babcock International Group
Babcock International Group Insider Transactions Over The Last Year
The CEO & Director David Lockwood made the biggest insider purchase in the last 12 months. That single transaction was for UK£119k worth of shares at a price of UK£1.99 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of UK£3.02. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
While Babcock International Group insiders bought shares during the last year, they didn't sell. They paid about UK£2.30 on average. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Babcock International Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Babcock International Group insiders have about 0.2% of the stock, worth approximately UK£2.4m. We prefer to see high levels of insider ownership.