We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Freelancer Limited (ASX:FLN).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Freelancer
In the last twelve months, the biggest single purchase by an insider was when Founder Robert Barrie bought AU$71k worth of shares at a price of AU$0.42 per share. We do like to see buying, but this purchase was at a lower price. The insider buying may not tell us much about how insiders feel about the current share price.
Happily, we note that in the last year insiders bought 832.05k shares for a total of AU$394k. Overall, Freelancer insiders were net buyers last year. Their average price was about AU$0.47. We don’t deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today’s share price. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Freelancer better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Freelancer Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Freelancer insiders own 82% of the company, worth about AU$289m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Freelancer Insider Transactions Indicate?
The fact that there have been no Freelancer insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Freelancer insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. Of course, the future is what matters most. So if you are interested in Freelancer, you should check out this free report on analyst forecasts for the company.
But note: Freelancer may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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