Stock Analysis

How Much Are LaserBond Limited (ASX:LBL) Insiders Taking Off The Table?

ASX:LBL
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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 shareholders might well want to know whether insiders have been buying or selling shares in LaserBond Limited (ASX:LBL).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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 LaserBond

The Last 12 Months Of Insider Transactions At LaserBond

In the last twelve months, the biggest single sale by an insider was when the Founder & Technical Consultant, Gregory Hooper, sold AU$2.7m worth of shares at a price of AU$0.69 per share. That means that even when the share price was slightly below the current price of AU$0.69, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 45% of Gregory Hooper's holding. The only individual insider seller over the last year was Gregory Hooper.

Gregory Hooper ditched 4.51m shares over the year. The average price per share was AU$0.70. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:LBL Insider Trading Volume December 7th 2020

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Insiders at LaserBond Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at LaserBond. In total, Founder & Technical Consultant Gregory Hooper dumped AU$3.1m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership of LaserBond

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. A high insider ownership often makes company leadership more mindful of shareholder interests. LaserBond insiders own 54% of the company, currently worth about AU$36m based on the recent share price. 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 LaserBond Tell Us?

An insider sold LaserBond shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - LaserBond has 3 warning signs we think you should be aware of.

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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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