As Ai-Media Technologies Limited (ASX:AIM) gains 12%, insiders who bought last year may be wishing they had bet higher

By
Simply Wall St
Published
October 26, 2021
ASX:AIM
Source: Shutterstock

Ai-Media Technologies Limited (ASX:AIM) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 12% resulting in a AU$24m addition to the company’s market value. As a result, their original purchase of AU$200k worth of stock is now worth AU$273k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Ai-Media Technologies

Ai-Media Technologies Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Co-Founder Anthony Abrahams for AU$200k worth of shares, at about AU$0.80 per share. We do like to see buying, but this purchase was made at well below the current price of AU$1.09. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:AIM Insider Trading Volume October 26th 2021

Ai-Media Technologies 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

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 32% of Ai-Media Technologies shares, worth about AU$73m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Ai-Media Technologies Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Ai-Media Technologies and their transactions don't cause us concern. 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. Every company has risks, and we've spotted 2 warning signs for Ai-Media Technologies you should know about.

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.

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