Careteq Insider Purchases Yet To Pay Off Regardless Of Recent Strength

Insiders who purchased AU$301.7k worth of Careteq Limited (ASX:CTQ) shares over the past year recouped some of their losses after price gained 20% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$52k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Careteq

The Last 12 Months Of Insider Transactions At Careteq

In fact, the recent purchase by John Tarrant was the biggest purchase of Careteq shares made by an insider individual in the last twelve months, according to our records. That means that an insider was happy to buy shares at above the current price of AU$0.018. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months Careteq insiders were buying shares, but not selling. Their average price was about AU$0.022. I'd consider this a positive as it suggests insiders see value at around the current price. 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!

Careteq is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Careteq Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Careteq. We can see that insider John Tarrant paid AU$231k for shares in the company. No-one sold. This makes one think the business has some good points.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Careteq insiders own about AU$522k worth of shares (which is 12% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Careteq Tell Us?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Careteq insiders are expecting a bright future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 4 warning signs for Careteq (3 can't be ignored!) that we believe deserve your full attention.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.