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Insiders who bought UK£181.4k worth of Secure Trust Bank PLC's (LON:STB) stock at an average buy price of UK£7.68 over the last year may be disappointed by the recent 29% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only UK£130.4k.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Secure Trust Bank
Secure Trust Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Director David McCreadie bought UK£100k worth of shares at a price of UK£8.43 per share. That means that an insider was happy to buy shares at above the current price of UK£5.52. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. David McCreadie was the only individual insider to buy shares in the last twelve months.
David McCreadie purchased 23.62k shares over the year. The average price per share was UK£7.68. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Secure Trust Bank Boast High 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. Our information indicates that Secure Trust Bank insiders own about UK£681k worth of shares. This level of insider ownership is notably low, and not very encouraging.
So What Do The Secure Trust Bank Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Secure Trust Bank insiders are expecting a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Secure Trust Bank has 2 warning signs and it would be unwise to ignore them.