Have Insiders Been Buying Cirrus Networks Holdings Limited (ASX:CNW) Shares This Year?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Cirrus Networks Holdings Limited (ASX:CNW), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

Check out our latest analysis for Cirrus Networks Holdings

The Last 12 Months Of Insider Transactions At Cirrus Networks Holdings

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Paul Everingham for AU$201k worth of shares, at about AU$0.04 per share. That means that an insider was happy to buy shares at above the current price of AU$0.022. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Paul Everingham was the only individual insider to buy during the last year.

Paul Everingham purchased 12.76m shares over the year. The average price per share was AU$0.034. 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!

Cirrus Networks Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Cirrus Networks Holdings Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. It appears that Cirrus Networks Holdings insiders own 27% of the company, worth about AU$5.2m. 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 Cirrus Networks Holdings Tell Us?

It doesn't really mean much that no insider has traded Cirrus Networks Holdings shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Cirrus Networks Holdings and we see no evidence to suggest they are worried about the 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. While conducting our analysis, we found that Cirrus Networks Holdings has 4 warning signs and it would be unwise to ignore them.

Of course Cirrus Networks Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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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. Thank you for reading.