Chairman of the Board of Kip McGrath Education Centres Damian Banks Buys 25% More Shares

Even if it's not a huge purchase, we think it was good to see that Damian Banks, the Chairman of the Board of Kip McGrath Education Centres Limited (ASX:KME) recently shelled out AU$120k to buy stock, at AU$0.60 per share. While we're hesitant to get too excited about a purchase of that size, we do note it increased their holding by a solid 25%.

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Kip McGrath Education Centres Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the MD & CEO, Storm McGrath, sold AU$402k worth of shares at a price of AU$0.40 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$0.63. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 17% of Storm McGrath's holding. Storm McGrath was the only individual insider to sell shares in the last twelve months.

Over the last year, we can see that insiders have bought 719.05k shares worth AU$346k. But insiders sold 1.00m shares worth AU$402k. 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!

Check out our latest analysis for Kip McGrath Education Centres

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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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Kip McGrath Education Centres insiders own 15% of the company, worth about AU$5.3m. 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 Do The Kip McGrath Education Centres Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. We don't take much heart from transactions by Kip McGrath Education Centres insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. In short they are likely aligned with shareholders. While it's good to be aware of 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. In terms of investment risks, we've identified 1 warning sign with Kip McGrath Education Centres and understanding it should be part of your investment process.

But note: Kip McGrath Education Centres 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.

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.