We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Freedom Foods Group Limited (ASX:FNP), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
Freedom Foods Group Insider Transactions Over The Last Year
The MD, CEO & Executive Director, Rory J. Macleod, made the biggest insider sale in the last 12 months. That single transaction was for AU$2.0m worth of shares at a price of AU$6.75 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$5.05. So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Rory J. Macleod. Notably Rory J. Macleod was also the biggest buyer, having purchased AU$665k worth of shares.
Over the last year, we can see that insiders have bought 138k shares worth AU$665k. On the other hand they divested 300k shares, for AU$2.0m. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Freedom Foods Group Insiders Bought Stock Recently
It's good to see that Freedom Foods Group insiders have made notable investments in the company's shares. In total, insiders bought AU$665k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Freedom Foods Group insiders own 1.6% of the company, worth about AU$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Freedom Foods Group Insiders?
It is good to see recent purchasing. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Freedom Foods Group insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. In short they are likely aligned with shareholders. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Freedom Foods Group.
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.
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 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.