Bullish insiders at Harvey Norman Holdings Limited (ASX:HVN) loaded up on AU$77m of stock earlier this year
Quite a few insiders have dramatically grown their holdings in Harvey Norman Holdings Limited (ASX:HVN) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Harvey Norman Holdings
The Last 12 Months Of Insider Transactions At Harvey Norman Holdings
In fact, the recent purchase by Co-Founder Gerald Harvey was not their only acquisition of Harvey Norman Holdings shares this year. They previously made an even bigger purchase of AU$29m worth of shares at a price of AU$3.86 per share. That means that an insider was happy to buy shares at above the current price of AU$3.68. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
While Harvey Norman Holdings insiders bought shares during the last year, they didn't sell. 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!
Harvey Norman Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Harvey Norman Holdings Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Harvey Norman Holdings. In total, insiders bought AU$77m worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Insider Ownership
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Harvey Norman Holdings insiders own 43% of the company, currently worth about AU$2.0b based on the recent share price. 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 Harvey Norman Holdings Insiders?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Harvey Norman Holdings. Looks promising! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 2 warning signs we've spotted with Harvey Norman Holdings (including 1 which can't be ignored).
But note: Harvey Norman Holdings 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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