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 before you buy or sell Saferoads Holdings Limited (ASX:SRH), you may well want to know whether insiders have been buying or selling.
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, rules govern insider transactions, and certain disclosures are required.
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 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’.
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The Last 12 Months Of Insider Transactions At Saferoads Holdings
Over the last year, we can see that the biggest insider purchase was by Founder Darren Hotchkin for AU$350k worth of shares, at about AU$0.35 per share. That means that even when the share price was higher, an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Over the last year, we can see that insiders have bought 1.43m shares worth AU$499k. But they sold 1.10m for AU$380k. In total, Saferoads Holdings insiders bought more than they sold over the last year. Their average price was about AU$0.35. This is nice to see since it implies that insiders might see value around current prices (around AU$0.34). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Saferoads Holdings Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Saferoads Holdings, over the last three months. In total, 3 insiders bought AU$499k worth of shares in that time. On the other hand, insiders netted AU$380k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Saferoads Holdings insiders own 56% of the company, worth about AU$6.9m. 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 Saferoads Holdings Tell Us?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Saferoads Holdings. That’s what I like to see! Along with insider transactions, I recommend checking if Saferoads Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course Saferoads Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.