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How Much Are Kip McGrath Education Centres Limited (ASX:KME) Insiders Spending On Buying Shares?

Simply Wall St

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Kip McGrath Education Centres Limited (ASX:KME).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

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 Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Kip McGrath Education Centres

The Last 12 Months Of Insider Transactions At Kip McGrath Education Centres

In the last twelve months, the biggest single purchase by an insider was when CEO & Director Storm McGrath bought AU$2.0m worth of shares at a price of AU$0.99 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.98). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months insiders purchased 2075867 shares for AU$2.1m. But insiders sold 45710 shares worth AU$36k. In the last twelve months there was more buying than selling by Kip McGrath Education Centres insiders. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

ASX:KME Recent Insider Trading, October 29th 2019

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.

Insiders at Kip McGrath Education Centres Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Kip McGrath Education Centres. CEO & Director Storm McGrath spent AU$2.0m on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Does Kip McGrath Education Centres Boast High Insider Ownership?

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. Kip McGrath Education Centres insiders own about AU$20m worth of shares (which is 44% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Kip McGrath Education Centres Tell Us?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Kip McGrath Education Centres insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

But note: Kip McGrath Education Centres 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.

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 editorial-team@simplywallst.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.