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We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in OFX Group Limited (ASX:OFX).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At OFX Group
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Independent Director Lisa Frazier bought AU$97k worth of shares at a price of AU$1.77 per share. That implies that an insider found the current (approximate) price enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. In any event it’s generally a positive if insiders are buying shares at around the current price.
Over the last year, we can see that insiders have bought 82.89k shares worth AU$147k. In the last twelve months there was more buying than selling by OFX Group insiders. They paid about AU$1.77 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of AU$1.81. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
OFX Group Insiders Bought Stock Recently
We saw some OFX Group insider buying shares in the last three months. CEO, MD & Director John Malcolm purchased AU$50k worth of shares in that period. It’s great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.
Does OFX Group Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 10.0% of OFX Group shares, worth about AU$45m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The OFX Group Insider Transactions Indicate?
We note a that there has been a tad more insider buying than selling, recently. But overall the difference isn’t worth writing home about. However, our analysis of transactions over the last year is heartening. Insiders own shares in OFX Group and we see no evidence to suggest they are worried about the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: OFX Group 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.