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Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Ricardo plc (LON:RCDO), that sends out a positive message to the company's 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.
Check out our latest analysis for Ricardo
The Last 12 Months Of Insider Transactions At Ricardo
Over the last year, we can see that the biggest insider purchase was by Chairman Mark Clare for UK£103k worth of shares, at about UK£5.13 per share. That means that even when the share price was higher than UK£4.95 (the recent price), an insider wanted to purchase shares. 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. We always take careful note of the price insiders pay when purchasing shares. 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.
While Ricardo insiders bought shares during the last year, they didn't sell. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership Of Ricardo
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our information indicates that Ricardo insiders own about UK£607k worth of shares. This level of insider ownership is notably low, and not very encouraging.
What Might The Insider Transactions At Ricardo Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Ricardo stock. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 1 warning sign for Ricardo you should be aware of.