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Should You Take Comfort From Insider Transactions At Johns Lyng Group Limited (ASX:JLG)?

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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Johns Lyng Group Limited (ASX:JLG).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.

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We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

View our latest analysis for Johns Lyng Group

The Last 12 Months Of Insider Transactions At Johns Lyng Group

MD, CEO & Director Scott Didier made the biggest insider purchase in the last 12 months. That single transaction was for AU$204k worth of shares at a price of AU$0.87 each. Even though the purchase was made at a significantly lower price than the recent price (AU$1.46), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Scott Didier purchased 540k shares over the year. The average price per share was AU$0.90. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

ASX:JLG Recent Insider Trading, July 16th 2019
ASX:JLG Recent Insider Trading, July 16th 2019

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.

Johns Lyng Group Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Johns Lyng Group. Specifically, Executive GM of Business Development & Client Relations and Executive Director Adrian Gleeson ditched AU$191k 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.

Does Johns Lyng Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Johns Lyng Group insiders own 40% of the company, worth about AU$130m. 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 Johns Lyng Group Insiders?

An insider hasn't bought Johns Lyng Group stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. And insider ownership remains quite considerable. So we're happy to look past recent trading. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Johns Lyng Group.

Of course Johns Lyng Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.