3M Stocks – Did Ratos AB (publ) (STO:RATO B) Insiders Buy Up More Shares?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Ratos AB (publ) (STO:RATO B).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.

See our latest analysis for Ratos

The Last 12 Months Of Insider Transactions At Ratos

In the last twelve months, the biggest single purchase by an insider was when Deputy Chairman Jan Söderberg bought kr4.3m worth of shares at a price of kr21.35 per share. We do like to see buying, but this purchase was made at well below the current price of kr39.60. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.

While Ratos insiders bought shares during the last year, they didn’t sell. Their average price was about kr24.20. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today’s share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Ratos 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 Ratos

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Ratos insiders own 20% of the company, worth about kr2.5b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Ratos Insiders?

There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Ratos insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Ratos has 1 warning sign and it would be unwise to ignore it.

But note: Ratos 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. 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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