It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Tern Plc’s (LON:TERN) case, it’s fantastic news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Tern Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Jonathan Swann bought UK£73k worth of shares at a price of UK£0.12 per share. That means that even when the share price was higher than UK£0.04 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. To us, it’s very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders purchased 3.41m shares for UK£416k. But they sold 128.93k shares for UK£16k. In total, Tern insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Insider Ownership Of Tern
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Tern insiders own about UK£3.3m worth of shares. That equates to 21% of the company. 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 Do The Tern Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Tern shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Tern and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Tern. For instance, we’ve identified 4 warning signs for Tern (2 shouldn’t be ignored) you should be aware of.
But note: Tern 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of 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 St has no position in any stocks mentioned.
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