When an insider buys stock, it’s usually not a big deal. However, when many insiders buy stock, such as Spirax-Sarco Engineering Plc (London: SPX) example, this is good news for shareholders.
While we would never suggest that investors base their decisions solely on what a company’s directors are doing, we would be unwise to ignore insider trading entirely.
View our latest analysis for Spirax-Sarco Engineering
Spirax-Sarco Engineering Insider Transactions Over the Last Year
Independent non-executive director Jane Kingston made the biggest insider buy in the last 12 months. That single transaction was priced at UK£125 each for shares worth UK£198k. So it is clear that an insider wanted to buy even at a higher price than the current share price (UK£109). While his mind may have changed since the purchase, it at least shows that he had confidence in the company’s future. For us, it is very important to consider the price that insiders pay for the shares. As a general rule, we feel more positive about a stock if insiders have bought shares above current prices, as this suggests they view the stock as a good value, even That too at high cost.
Spirax-Sarco Engineering insiders may have bought shares last year, but they haven’t sold a single share. Their average price was around UK£106. It’s nice to see insiders putting their cash into a company’s stock, even if it’s less than the recent share price. You can see a visual illustration of insider trading (by companies and individuals) over the past 12 months below. If you click on the chart, you can see all individual transactions including share price, date and time!
Spirax-Sarco Engineering isn’t the only stock that insiders are buying. for those who like to explore winning investment it free The list of companies growing with recent insider purchases, may be just the ticket.
Spirax-Sarco Engineering Insiders recently bought the stock
Over the past three months, we have seen significant insider buying at Spirax-Sarco Engineering. We can see that Nicolas Anderson, chief executive and executive director of the group, paid UK£102k for shares in the company. None sold. This can be interpreted as suggesting a positive attitude.
Does Spirax-Sarco Engineering claim high insider ownership?
Another way to test the alignment between a company’s leaders and other shareholders is to look at how many shares they own. Generally, the higher the insider ownership, the more likely it is that insiders will be encouraged to hold the company for the long term. Insiders hold 0.1% of Spirax-Sarco Engineering shares, which are worth approximately UK£11m. This level of insider ownership is good but falls short of being particularly stand-out. It certainly suggests a fair degree of alignment.
So what do the insider trading of Spirax-Sarco Engineering indicate?
Good to see the recent insider buying. We also rely on the longer term picture of insider trading. Given that insiders also own a substantial amount of Spirax-Sarco Engineering, we think they’re probably confident of a bright future ahead. If you’re like me, you may want to wonder whether this company will grow or shrink. Fortunately, you can check free Reports showing analyst forecasts for its future.
But note: Spirax-Sarco Engineering May Not Be the Best Stock to Buy, so take a look at free List of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivatives transactions.
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find out whether Spirax-Sarco Engineering potentially overpriced or underpriced by checking out our comprehensive analysis, which includes Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.
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This article from Simply Wall St is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock, and does not take into account your objectives, or your financial situation. We aim to bring you long term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall Street has no position in any of the stocks mentioned.