Insider Stock Buying Reaches AU$873.1k On ASX

When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in ASX Limited's (ASX:ASX) instance, it's good news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for ASX

ASX Insider Transactions Over The Last Year

The Independent Non-Executive Chairman Damian Roche made the biggest insider purchase in the last 12 months. That single transaction was for AU$644k worth of shares at a price of AU$64.36 each. That means that an insider was happy to buy shares at above the current price of AU$62.47. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While ASX insiders bought shares during the last year, they didn't sell. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

ASX Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at ASX. Not only was there no selling that we can see, but they collectively bought AU$229k worth of shares. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of ASX

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that ASX insiders own about AU$9.6m worth of shares (which is 0.08% of the company). We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At ASX Tell Us?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that ASX insiders are expecting a bright future. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of ASX.

But note: ASX 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.