When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Eleco Plc's (LON:ELCO) instance, it's good news for shareholders.
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.
See our latest analysis for Eleco
The Last 12 Months Of Insider Transactions At Eleco
The Non-Executive Chairman Serena Lang made the biggest insider purchase in the last 12 months. That single transaction was for UK£100k worth of shares at a price of UK£1.32 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.71). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Eleco insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and 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 always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Eleco Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Eleco insiders own about UK£14m worth of shares. That equates to 23% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Eleco Insiders?
It doesn't really mean much that no insider has traded Eleco shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Eleco and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Eleco has 1 warning sign we think you should be aware of.