The MD, CEO & Executive Director of InvestSMART Group Limited (ASX:INV), Peter Hodge, Just Bought 5.7% More Shares

By
Simply Wall St
Published
March 08, 2021
ASX:INV
Source: Shutterstock

Even if it's not a huge purchase, we think it was good to see that Peter Hodge, the MD, CEO & Executive Director of InvestSMART Group Limited (ASX:INV) recently shelled out AU$110k to buy stock, at AU$0.16 per share. However, it only increased their shares held by 5.7%, and it wasn't a huge purchase by absolute value, either.

View our latest analysis for InvestSMART Group

InvestSMART Group Insider Transactions Over The Last Year

Notably, that recent purchase by MD, CEO & Executive Director Peter Hodge was not the only time they bought InvestSMART Group shares this year. They previously made an even bigger purchase of AU$272k worth of shares at a price of AU$0.085 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.17), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Peter Hodge bought 5.66m shares over the last 12 months at an average price of AU$0.092. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:INV Insider Trading Volume March 8th 2021

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

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. InvestSMART Group insiders own about AU$8.4m worth of shares. That equates to 34% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The InvestSMART Group Insider Transactions Indicate?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in InvestSMART Group shares, given these transactions (along with notable insider ownership of the company). While we like knowing 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 3 warning signs with InvestSMART Group and understanding these should be part of your investment process.

But note: InvestSMART Group 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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