Insiders who acquired for £228,000 in the UK Fevertree Drinks PLC (LON:FEVR) at the average price of UK£23.42 over the past 12 months might be dismayed by the recent 19% price drop. Insiders invest in the hope that their money will increase in value over time. However, following recent losses, their original investment is now worth just £143,000, which is not what they expected.
While we would never suggest that investors base their decisions solely on what a company’s directors have done, we think it makes perfect sense to keep tabs on what insiders are doing.
See our latest review for Fevertree Drinks
Fevertree drinks insider trading over the past year
Over the past year, we can see that the biggest insider buy was made by independent non-executive director Kevin Havelock for £189,000 worth of shares, or around £24.82 per share. This means that even when the share price was above £14.66 (the recent price), an insider wanted to buy shares. Although their perspective has changed since the purchase, it at least suggests that they have confidence in the future of the company. In our view, the price an insider pays for a stock is very important. Generally, we are more positive about a stock if insiders bought the stock above current prices, as this suggests they viewed the stock as good value, even at a higher price.
Over the past twelve months, Fevertree Drinks insiders have been buying stocks, but not selling. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. By clicking on the graph below, you will be able to see the precise detail of each insider trade!
There are always plenty of stocks that insiders are buying. So if it suits your style you can check each stock one by one or you can take a look at this free list of companies. (Hint: insiders bought them).
Fevertree Drinks Insiders Recently Bought Stock
There has been some insider buying at Fevertree Drinks over the past quarter. Independent non-executive director Domenico De Lorenzo paid £39,000 for shares around the time. It’s good to see insider buying, as well as the lack of recent sellers. However, in this case, the amount invested recently is quite small.
Another way to test alignment between a company’s executives and other shareholders is to look at how many shares they own. We generally like to see fairly high levels of insider ownership. It’s great to see that insiders at Fevertree Drinks own 10% of the company, which is worth around £172m. This type of significant insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.
What could insider trading at Fevertree Drinks tell us?
Insider buying may have been minimal over the past three months, but there has been no selling. Overall, the purchase is not worth writing about. But insiders have shown more appetite for the stock over the past year. With strong insider ownership and encouraging transactions, it seems Fevertree Drinks insiders think the company has some merit. So, while it is useful to know what insiders are doing in terms of buying or selling, it is also useful to know the risks that a particular company faces. During our analysis, we found that Fevertree Drinks has 1 warning sign and it would be unwise to ignore it.
Sure Fevertree Drinks may not be the best stock to buy. So you might want to see this free set of high quality companies.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.