Just a small question...

[oldsnoophoop]

The directer of a particular company I have taken an interest in has recently bought shares in the company, is this a bad thing, is it a warning sign? Any comments would be welcome.

 

[jobibear]

Good, generally. Why would they be buying in their own company only to see it's value drop, thus throwing their money away. Maybe they believe the company is going to gain value. Good

 

[BSD]

The directer of a particular company I have taken an interest in has recently bought shares in the company, is this a bad thing, is it a warning sign? Any comments would be welcome.

Hey, I'd be very very afraid if someone commits their own money to something, wouldn't you ?

I mean, if you buy a house that's normally an indication that your neighbours should start getting really scared because of a well known correlation between house ownership and house owners torching their homes a bit down the line, right ?

Same like buying a car, car owners usually go drive em against walls pretty rapidly just for the fun of it, while by contrast rental car drivers tend to drive like they're surrounded by an invisible protection shield, what ?

Mate, Caveat Emptor is all I can say !

I'd probably try and sell my shares as quickly as possible !

Safe is safe, what ?

 

[littlemog]

it might or might not mean anything, especially in these turbulent times. i've seen companies where the price action was sliding all the way even as insiders snapped up shares, it did nothing but cause temporary spikes. it'll be a good thing to see why but there could be so many factors involved. best stick to your trading plan.

 

[oldsnoophoop]

This is what I have read, which is why I am concerned....

'A warning sign is a company buying back its shares. It is an admission oif management failure. It shows there are no more remunerative sources for the corporate cash in investing in the business. Or the business is trying to boost its earnings per share figure without changing the fundamentals'

 

[jobibear]

OK I lose. However Shell announced they were buying their shares today and I think their fundamentals are sound.

 

[oldsnoophoop]

OK I lose. However Shell announced they were buying their shares today and I think their fundamentals are sound.

I think with a big company like Shell it is different. Very confusing business all this...

 

[MrGecko]

depends if it was the company that bought them or a director;

but either way, it could be good or bad.

If the Director is buying them, he may see good value in the firm. He may be under pressure to send a calming message toexisting shareholders (despite the value of the shares), or he may be exercising some options he has earned in order to cash out. Pretty difficult to tell without a sound understanding of the firm.

If the company is buying its own shares.... may be it has a stack load of spare cash (bad), maybe it is trying to up it's tier 1 ratio, maybe it is trying to defend itself from a hostile - again, very difficult to tell.

 

[barjon]

This is what I have read, which is why I am concerned....

'A warning sign is a company buying back its shares. It is an admission oif management failure. It shows there are no more remunerative sources for the corporate cash in investing in the business. Or the business is trying to boost its earnings per share figure without changing the fundamentals'

A company buying back its shares (which is not necessarily a bad thing - many big companies have done it and enhanced the value of shareholders stakes) is very different from a Director buying shares (which is not necessarily a good thing - many have done it to try and demonstrate confidence in a leaking vessel).

good trading

jon

 

[Jaydee]

Just to add, it depends on how many shares he bought. A couple of thousand pounds worth can be a cheap way to pull in some investors and temporarily stabilise the share price.