This Insider Has Just Sold Shares In Sims
We wouldn't blame Sims Limited (ASX:SGM) shareholders if they were a little worried about the fact that Stephen Mikkelsen, the Group CEO recently netted about AU$969k selling shares at an average price of AU$24.23. That's a big disposal, and it decreased their holding size by 14%, which is notable but not too bad.
Sims Insider Transactions Over The Last Year
In fact, the recent sale by Stephen Mikkelsen was the biggest sale of Sims shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of AU$24.75, 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 14% of Stephen Mikkelsen's holding.
Happily, we note that in the last year insiders paid AU$545k for 24.62k shares. But they sold 40.00k shares for AU$969k. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for Sims
I will like Sims better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 Sims insiders own 0.3% of the company, worth about AU$15m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Sims Tell Us?
The stark truth for Sims is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Sims is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Sims may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 of direct interests only, but not derivative transactions or indirect interests.
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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.