Even if it's not a huge purchase, we think it was good to see that Lindsay Hannan, a Ovato Limited (ASX:OVT) insider, recently shelled out AU$132k to buy stock, at AU$0.011 per share. However, we do note that it only increased their holding by 6.4%, and it wasn't a huge purchase by absolute value, either.
Ovato Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chief Operating Officer James Hannan for AU$1.6m worth of shares, at about AU$0.051 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.012). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for 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 68.88m shares worth AU$3.0m. But insiders sold 31653644 shares worth AU$1.6m. Overall, Ovato insiders were net buyers last year. Their average price was about AU$0.043. I'd consider this a positive as it suggests insiders see value at around the current price. 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 plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Ovato insiders own about AU$3.9m worth of shares (which is 53% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Ovato Tell Us?
It is good to see recent purchasing. 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. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Ovato. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Ovato. At Simply Wall St, we've found that Ovato has 6 warning signs (3 are a bit unpleasant!) that deserve your attention before going any further with your analysis.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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.
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