Favorable turn of events for Service Stream Limited (ASX:SSM) insiders who've lost AU$102k to date on a AU$2.3m purchase

Insiders who bought AU$2.3m worth of Service Stream Limited (ASX:SSM) stock in the last year have seen some of their losses recouped as the stock gained 10% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at AU$102k since the time of purchase.

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

See our latest analysis for Service Stream

Service Stream Insider Transactions Over The Last Year

The Non-Executive Director Thomas Coen made the biggest insider purchase in the last 12 months. That single transaction was for AU$1.2m worth of shares at a price of AU$0.90 each. That means that even when the share price was higher than AU$0.87 (the recent price), an insider wanted to purchase shares. 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Service Stream insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Service Stream 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.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 12% of Service Stream shares, worth about AU$57m. 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 Service Stream Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Service Stream and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Service Stream. For example - Service Stream has 2 warning signs we think you should be aware of.

Of course Service Stream 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. 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.