While it’s been a great week for Cedergrenska AB (publ) (STO:CEDER) shareholders after stock gained 11%, they should consider it with a grain of salt. In spite of the relatively cheap prices, insiders made the decision to sell kr2.3m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Cedergrenska Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Founder & Director, Niklas Palsson, for kr2.3m worth of shares, at about kr45.00 per share. That means that even when the share price was below the current price of kr52.60, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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. We note that the biggest single sale was only 2.3% of Niklas Palsson's holding. Niklas Palsson was the only individual insider to sell over the last year.
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 Cedergrenska
I will like Cedergrenska 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
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. It appears that Cedergrenska insiders own 39% of the company, worth about kr263m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Cedergrenska Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of Cedergrenska, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cedergrenska. Every company has risks, and we've spotted 3 warning signs for Cedergrenska you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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