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 shareholders might well want to know whether insiders have been buying or selling shares in Canadian Pacific Railway Limited (TSE:CP).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Canadian Pacific Railway Insider Transactions Over The Last Year
The CEO, President & Director Keith Creel made the biggest insider purchase in the last 12 months. That single transaction was for CA$2.8m worth of shares at a price of CA$297 each. So it's clear an insider wanted to buy, at around the current price, which is CA$368. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Canadian Pacific Railway share holders is that insiders were buying at near the current price.
In the last twelve months insiders purchased 15.79k shares for CA$4.5m. But they sold 1.73k shares for CA$577k. Overall, Canadian Pacific Railway insiders were net buyers during the last year. You can see the insider transactions (by companies and 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!
Canadian Pacific Railway is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Canadian Pacific Railway
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Canadian Pacific Railway insiders own about CA$12m worth of shares (which is 0.02% of the company). We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At Canadian Pacific Railway Tell Us?
It doesn't really mean much that no insider has traded Canadian Pacific Railway shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Canadian Pacific Railway and we see no evidence to suggest they are worried about the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 1 warning sign for Canadian Pacific Railway that deserve your attention before buying any shares.
Of course Canadian Pacific Railway 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, but not derivative transactions.
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. 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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