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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 Compass Group PLC (LON:CPG), that sends out a positive message to the company's shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Compass Group
The Last 12 Months Of Insider Transactions At Compass Group
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Arlene Isaacs-Lowe bought UK£61k worth of shares at a price of UK£21.76 per share. We do like to see buying, but this purchase was made at well below the current price of UK£25.30. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Compass Group insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Compass Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Compass Group Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 0.03% of Compass Group shares, worth about UK£15m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Compass Group Insiders?
It doesn't really mean much that no insider has traded Compass Group shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Compass Group 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. While conducting our analysis, we found that Compass Group has 1 warning sign and it would be unwise to ignore it.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.