Need To Know: ECP Emerging Growth Limited (ASX:ECP) Insiders Have Been Buying Shares

We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in ECP Emerging Growth Limited (ASX:ECP).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for ECP Emerging Growth

The Last 12 Months Of Insider Transactions At ECP Emerging Growth

The insider Emmanuel Pohl made the biggest insider purchase in the last 12 months. That single transaction was for AU$288k worth of shares at a price of AU$1.00 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$1.45. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

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!

ECP Emerging Growth is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of ECP Emerging Growth

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's great to see that ECP Emerging Growth insiders own 42% of the company, worth about AU$11m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At ECP Emerging Growth Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like ECP Emerging Growth insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for ECP Emerging Growth (2 shouldn't be ignored!) and we strongly recommend you look at these before investing.

But note: ECP Emerging Growth 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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