We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in 8common Limited (ASX:8CO).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
8common Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Kok Fui Lau bought AU$95k worth of shares at a price of AU$0.043 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.088. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
Over the last year, we can see that insiders have bought 4.79m shares worth AU$300k. But insiders sold 232560 shares worth AU$28k. Overall, 8common insiders were net buyers last year. The average buy price was around AU$0.063. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today’s share price. You can see the insider transactions (by 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!
8common 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 8common Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. 8common insiders own about AU$5.0m worth of shares. That equates to 35% of the company. 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 8common Tell Us?
It doesn’t really mean much that no insider has traded 8common shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in 8common and their transactions don’t cause us concern. Along with insider transactions, I recommend checking if 8common is growing revenue. This free chart of historic revenue and earnings should make that easy.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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