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Should You Take Comfort From Insider Transactions At PARKD Limited (ASX:PKD)?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in PARKD Limited (ASX:PKD).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. 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'.

Check out our latest analysis for PARKD

The Last 12 Months Of Insider Transactions At PARKD

Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Bronte Howson for AU$72k worth of shares, at about AU$0.03 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.051. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Bronte Howson bought a total of 5.85m shares over the year at an average price of AU$0.03. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

PARKD is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of PARKD

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 39% of PARKD shares, worth about AU$2.0m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At PARKD Tell Us?

It doesn't really mean much that no insider has traded PARKD shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in PARKD and their transactions don't cause us concern. 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 4 warning signs we've spotted with PARKD (including 2 which don't sit too well with us).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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