HMC Capital's Market Cap Drops To AU$1.4b Leaving Insiders With Losses

Insiders who bought AU$7.06m worth of HMC Capital Limited's (ASX:HMC) stock at an average buy price of AU$4.55 over the last year may be disappointed by the recent 10% decrease in the stock. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$5.32m which is not ideal.

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.

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The Last 12 Months Of Insider Transactions At HMC Capital

Over the last year, we can see that the biggest insider sale was by the insider, Isaac Fried, for AU$5.9m worth of shares, at about AU$10.67 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of AU$3.43. So it may not tell us anything about how insiders feel about the current share price. Isaac Fried was the only individual insider to sell over the last year. Notably Isaac Fried was also the biggest buyer, having purchased AU$7.1m worth of shares.

In the last twelve months insiders purchased 1.55m shares for AU$7.1m. But they sold 550.00k shares for AU$5.9m. In total, HMC Capital insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for HMC Capital

HMC Capital is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

HMC Capital Insiders Bought Stock Recently

It's good to see that HMC Capital insiders have made notable investments in the company's shares. Specifically, MD, Group CEO & Director David Di Pilla bought AU$1.5m worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. HMC Capital insiders own about AU$118m worth of shares. That equates to 8.4% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At HMC Capital Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest HMC Capital insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing HMC Capital. In terms of investment risks, we've identified 2 warning signs with HMC Capital and understanding them should be part of your investment process.

But note: HMC Capital 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.