The fact that multiple AB Electrolux (publ) (STO:ELUX B) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
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.
Over the last year, we can see that the biggest insider sale was by the President, Jonas Samuelson, for kr7.0m worth of shares, at about kr129 per share. That means that an insider was selling shares at around the current price of kr118. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Notably Jonas Samuelson was also the biggest buyer, having purchased kr13m worth of shares.
Over the last year, we can see that insiders have bought 89.45k shares worth kr13m. On the other hand they divested 153.29k shares, for kr21m. All up, insiders sold more shares in AB Electrolux than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Over the last three months, we've seen significant insider buying at AB Electrolux. Head of Consumer Experience & Product Lines and Executive VP Ola Nilsson spent kr664k on stock, and there wasn't any selling. That shows some optimism about the company's future.
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. Insiders own 0.2% of AB Electrolux shares, worth about kr61m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
It is good to see the recent insider purchase. However, the longer term transactions are not so encouraging. While recent transactions indicate confidence in AB Electrolux, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 1 warning sign for AB Electrolux you should be aware of.
But note: AB Electrolux 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 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.