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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 Cloetta AB (publ) (STO:CLA B).
What Is Insider Buying?
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 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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
View our latest analysis for Cloetta
Cloetta Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chief Financial Officer Frans Rydén for kr1.4m worth of shares, at about kr26.63 per share. That implies that an insider found the current price of kr28.54 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Cloetta insiders decided to buy shares at close to current prices.
Happily, we note that in the last year insiders paid kr4.1m for 152k shares. But they sold 44965 for kr1.3m. Overall, Cloetta insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Cloetta Insiders Are Selling The Stock
The last three months saw significant insider selling at Cloetta. In total, insider Jacob Broberg dumped kr1.2m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Cloetta
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Cloetta insiders own 3.0% of the company, worth about kr250m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.