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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 shareholders might well want to know whether insiders have been buying or selling shares in EXFO Inc. (TSE:EXF).
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, 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 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.'
EXFO Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Founder & Executive Chairman Germain Lamonde for CA$283k worth of shares, at about CA$4.88 per share. We do like to see buying, but this purchase was made at well below the current price of CA$6.15. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
In the last twelve months insiders purchased 91400 shares for CA$411k. But they sold 41424 for CA$229k. Overall, EXFO insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
EXFO Insiders Are Selling The Stock
The last quarter saw substantial insider selling of EXFO shares. In total, CFO & VP of Finance Pierre Plamondon dumped US$203k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of EXFO
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. EXFO insiders own about CA$20m worth of shares. That equates to 5.8% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At EXFO Tell Us?
An insider sold stock recently, but they haven't been buying. In contrast, they appear keener if you look at the last twelve months. And insiders do own shares. So we're happy enough to look past some selling. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for EXFO.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.