Yahoo Finance Should You Take Comfort From Insider Transactions At Lookers plc (LON:LOOK)?
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Lookers plc (LON:LOOK).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
See our latest analysis for Lookers
Lookers Insider Transactions Over The Last Year
insider Peter Jones made the biggest insider purchase in the last 12 months. That single transaction was for UK£1.6m worth of shares at a price of UK£0.38 each. We do like to see buying, but this purchase was made at well below the current price of UK£0.58. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Lookers insiders may have bought shares in the last year, but they didn't sell any. Their average price was about UK£0.46. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Lookers Have Bought Stock Recently
Over the last quarter, Lookers insiders have spent a meaningful amount on shares. We can see that insider Peter Jones paid UK£1.2m for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.
Does Lookers Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Lookers insiders own 11% of the company, worth about UK£24m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Lookers Insiders?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in Lookers shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Lookers, you should check out this free report on analyst forecasts for the company.
But note: Lookers 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.
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.
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