Insiders who purchased this year lose AU$224k as SomnoMed Limited (ASX:SOM) stock drops to AU$1.52
Insiders who acquired AU$661k worth of SomnoMed Limited's (ASX:SOM) stock at an average price of AU$2.29 in the past 12 months may be dismayed by the recent 11% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$437k which is not ideal.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for SomnoMed
SomnoMed Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board Gaetano Russo for AU$499k worth of shares, at about AU$2.30 per share. That means that even when the share price was higher than AU$1.52 (the recent price), an insider wanted to purchase shares. 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. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Over the last year, we can see that insiders have bought 288.56k shares worth AU$661k. But insiders sold 49.38k shares worth AU$81k. Overall, SomnoMed insiders were net buyers during the last year. You can see the insider transactions (by companies and 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
SomnoMed Insiders Are Selling The Stock
The last three months saw significant insider selling at SomnoMed. In total, Global CEO Neil Verdal-Austin sold AU$81k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does SomnoMed Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that SomnoMed insiders own about AU$9.9m worth of shares (which is 7.9% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The SomnoMed Insider Transactions Indicate?
An insider sold stock recently, but they haven't been buying. On the other hand, the insider transactions over the last year are encouraging. But insiders own relatively little of the company, from what we can see. So we can't be sure that insiders are optimistic. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 3 warning signs with SomnoMed and understanding them should be part of your investment process.
But note: SomnoMed 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
