Even if it's not a huge purchase, we think it was good to see that Aviad Eyal, the Non-Executive Director of Prospa Group Limited (ASX:PGL) recently shelled out AU$51k to buy stock, at AU$0.78 per share. Although the purchase is not a big one, increasing their shareholding by only 2.4%, it can be interpreted as a good sign.
Prospa Group Insider Transactions Over The Last Year
In fact, the recent purchase by Non-Executive Director Aviad Eyal was not their only acquisition of Prospa Group shares this year. They previously made an even bigger purchase of AU$384k worth of shares at a price of AU$2.57 per share. That means that even when the share price was higher than AU$0.77 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Aviad Eyal was also the biggest seller.
Over the last year, we can see that insiders have bought 696.86k shares worth AU$1.3m. On the other hand they divested 50.19k shares, for AU$91k. In total, Prospa Group insiders bought more than they sold over the last year. Their average price was about AU$1.87. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Does Prospa Group Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Prospa Group insiders own 60% of the company, currently worth about AU$75m based on the recent share price. 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 Prospa Group Tell Us?
The recent insider purchases are heartening. 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. When combined with notable insider ownership, these factors suggest Prospa Group insiders are well aligned, and quite possibly think the share price is too low. Nice! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Prospa Group has 2 warning signs we think you should be aware of.
But note: Prospa 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.
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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