Although it may not be a major event, we are pleased to see that Darrell Thomas, an insider at the company, recently purchased £66,000 worth of stock at a price of £32.89 per share. While this purchase at this scale does not overly excite us, we did take note that it increased their ownership stake by 43%.
Insider trading in British American Tobacco and Philip Morris International over the past 12 months.
In the past 12 months, the largest single purchase made by an insider was Independent Non-Executive Director Ming Kwan buying shares worth £266,000 at a price of £33.22 per share. This indicates that at least one insider was willing to buy even at a price above the current share price of £32.94. While their perspective may have changed since then, it suggests they were optimistic at the time. We believe the price paid by insiders for shares is crucial information, as a price higher than the current market price is usually more encouraging, as it indicates they see value even at a higher price.
It is pleasing to note that internal personnel paid £429,000 for 13,000 shares last year. However, internal personnel sold 5,060 shares worth £177,000. Overall, internal personnel at British American Tobacco bought more than they sold in the last year. The following chart displays last year's insider trading by company and individual.
Employees holding stocks.
Examining a company's total number of shares held by insiders can provide insight into whether or not they are aligned with ordinary shareholders. Typically, the higher the level of insider ownership, the more likely insiders are incentivized to build the company for the long term. Insiders at British American Tobacco hold shares worth approximately £6.4 billion, representing 8.7% of the company's total shares. Most shareholders would be pleased to see this kind of insider ownership, as it indicates that management's incentives align with those of other shareholders.
What could insider trading at British American Tobacco reveal?
We are pleased to see recent insider purchases and have gained confidence in the long-term prospects of insider trading. Considering the high levels of insider ownership, insiders appear to be bullish on British American Tobacco. This looks promising! While understanding insider behavior in trading is helpful, it's also important to understand the risks that specific companies face. In terms of investment risks, we have identified two warning signs for British American Tobacco that should be a part of your investment process.
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