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We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Bega Cheese Limited (ASX:BGA), 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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
View our latest analysis for Bega Cheese
Bega Cheese Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Richard Cross, for AU$90k worth of shares, at about AU$4.51 per share. That means that even when the share price was below the current price of AU$5.22, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 9.5% of Richard Cross's stake. Richard Cross was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 24.09k shares for AU$116k. On the other hand they divested 20.06k shares, for AU$90k. In total, Bega Cheese insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Bega Cheese is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Bega Cheese Insiders Bought Stock Recently
Over the last quarter, Bega Cheese insiders have spent a meaningful amount on shares. Overall, five insiders shelled out AU$115k for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.