We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Alithya Group Inc. (TSE:ALYA), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 it is perfectly logical to keep tabs on what insiders are doing. 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'.
Alithya Group Insider Transactions Over The Last Year
President Paul Raymond made the biggest insider purchase in the last 12 months. That single transaction was for CA$200k worth of shares at a price of CA$3.93 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$3.00). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months Alithya Group insiders were buying shares, but not selling. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Alithya Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Alithya Group Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Alithya Group. Not only was there no selling that we can see, but they collectively bought CA$181k worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Alithya Group
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 5.9% of Alithya Group shares, worth about CA$10m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Alithya Group Tell Us?
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Alithya Group we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 4 warning signs for Alithya Group (2 don't sit too well with us) you should be aware of.
But note: Alithya Group 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.
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