Yahoo Finance Are Insiders Selling Compass Group PLC (LON:CPG) Stock?
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Compass Group PLC (LON:CPG).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for Compass Group
The Last 12 Months Of Insider Transactions At Compass Group
Over the last year, we can see that the biggest insider sale was by the Group COO of North America & Executive Director, Gary Green, for UK£2.9m worth of shares, at about UK£20.19 per share. That means that even when the share price was below the current price of UK£20.96, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 42.6% of Gary Green's stake.
In the last twelve months insiders purchased 4404 shares for UK£80k. But they sold 156k for UK£3.1m. Over the last year we saw more insider selling of Compass Group shares, than buying. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Compass Group Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Compass Group recently. We note Gary Green cashed in UK£2.9m worth of shares. Meanwhile Non-Executive Director Anne-Francoise Nesmes bought UK£40k worth. Generally this level of net selling might be considered a bit bearish.
Insider Ownership of Compass Group
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Compass Group insiders own about UK£15m worth of shares. That equates to 0.05% of the company. 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 Do The Compass Group Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Compass Group stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Compass Group makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. We'd think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Compass Group.
But note: Compass Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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.
