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 Indiva Limited (CVE:NDVA), you may well want to know whether insiders have been buying or selling.
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Indiva
In the last twelve months, the biggest single sale by an insider was when the insider, Olivier Benloulou, sold CA$347k worth of shares at a price of CA$0.34 per share. So what is clear is that an insider saw fit to sell at around the current price of CA$0.29. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Olivier Benloulou was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 1792333 shares worth CA$569k. But they sold 1114500 for CA$347k. Overall, Indiva insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Indiva 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.
Indiva Insiders Bought Stock Recently
At Indiva,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, two insiders bought CA$462k worth of shares in that time. But we did see insider Olivier Benloulou sell shares worth CA$347k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Indiva insiders own 14% of the company, worth about CA$3.4m. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Indiva Tell Us?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Indiva stock. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free.
But note: Indiva 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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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.