Potential IODM Limited (ASX:IOD) shareholders may wish to note that the Non-Executive Director, Anthony Smith, recently bought AU$236k worth of stock, paying AU$0.17 for each share. Although the purchase only increased their holding by 6.0%, it is still a solid purchase in our view.
The Last 12 Months Of Insider Transactions At IODM
Notably, that recent purchase by Anthony Smith is the biggest insider purchase of IODM shares that we've seen in the last year. That means that even when the share price was higher than AU$0.16 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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. We note that Anthony Smith was also the biggest seller.
Over the last year, we can see that insiders have bought 7.94m shares worth AU$1.0m. But insiders sold 1906722 shares worth AU$272k. In the last twelve months there was more buying than selling by IODM insiders. The average buy price was around AU$0.13. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
IODM is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does IODM Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 37% of IODM shares, worth about AU$36m. 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 IODM Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest IODM insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing IODM. For example, IODM has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.
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.
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. 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.
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