It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Altium Limited (ASX:ALU), you may well want to know whether insiders have been buying or selling.
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 don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Altium
Independent Non-Executive Director Wendy Stops made the biggest insider purchase in the last 12 months. That single transaction was for AU$104k worth of shares at a price of AU$20.83 each. We do like to see buying, but this purchase was made at well below the current price of AU$33.16. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Altium insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$17.32. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Altium 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 Altium
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Altium insiders own 11% of the company, currently worth about AU$508m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Altium Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Altium shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Altium insiders feel good about the company's future. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Altium.
Of course Altium may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
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.