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Should You Be Worried About Insider Transactions At Persimmon Plc (LON:PSN)?

Simply Wall St

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 Persimmon Plc (LON:PSN).

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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.

See our latest analysis for Persimmon

The Last 12 Months Of Insider Transactions At Persimmon

Over the last year, we can see that the biggest insider sale was by the Group Finance Director & Director, Michael Killoran, for UK£12m worth of shares, at about UK£24.33 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of UK£19.05. So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 2158 shares for UK£43k. On the other hand they divested 483k shares, for UK£12m. Over the last year we saw more insider selling of Persimmon shares, than buying. 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!

LSE:PSN Recent Insider Trading, September 3rd 2019

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Are Persimmon Insiders Buying Or Selling?

We saw Independent Non-Executive Director Rachel Kentleton buy shares worth UK£13k in the last three months. That's only a tiny bit more than the sales, worth UK£13k. Looking at the net result, we don't think these recent trades shed much light on how insiders, as a group, are feeling about the company's prospects.

Insider Ownership of Persimmon

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. It appears that Persimmon insiders own 1.2% of the company, worth about UK£71m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Persimmon Tell Us?

Insider sales and purchases have netted out over the last three months, so it's hard to draw any conclusion from recent trading. We're a little cautious about the insider selling at Persimmon. But it's good to see that insiders own shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Persimmon.

But note: Persimmon 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.