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 The Food Revolution Group Limited (ASX:FOD).
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Food Revolution Group Insider Transactions Over The Last Year
The insider, Blagoja Nikolovski, made the biggest insider sale in the last 12 months. That single transaction was for AU$4.5m worth of shares at a price of AU$0.12 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of AU$0.066. So it may not shed much light on insider confidence at current levels. Blagoja Nikolovski was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 1180000 shares for AU$100k. But they sold 38513302 for AU$4.5m. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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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 37% of Food Revolution Group shares, worth about AU$15m. 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 Food Revolution Group Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Food Revolution Group shares in the last quarter. We don't take much encouragement from the transactions by Food Revolution Group insiders. But we do like the fact that insiders own a fair chunk of the company. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.