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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, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Ricardo
Ricardo Insider Transactions Over The Last Year
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£4.22 (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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months Ricardo 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!
Ricardo is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data isn't picking up on much insider ownership at Ricardo, though insiders do hold about UK£432k worth of shares. This level of insider ownership is notably low, and not very encouraging.
So What Does This Data Suggest About Ricardo Insiders?
It doesn't really mean much that no insider has traded Ricardo shares in the last quarter. However, our analysis of transactions over the last year is heartening. We'd like to see bigger individual holdings. However, we don't see anything to make us think Ricardo insiders are doubting the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Ricardo.