Stock Analysis

How Much Are Pinnacle Investment Management Group Limited (ASX:PNI) Insiders Taking Off The Table?

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ASX:PNI
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Pinnacle Investment Management Group Limited (ASX:PNI), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Pinnacle Investment Management Group

Pinnacle Investment Management Group Insider Transactions Over The Last Year

The MD & Executive Director, Ian Macoun, made the biggest insider sale in the last 12 months. That single transaction was for AU$9.2m worth of shares at a price of AU$6.10 each. That means that even when the share price was below the current price of AU$6.63, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 5.3% of Ian Macoun's stake. Notably Ian Macoun was also the biggest buyer, having purchased AU$2.1m worth of shares.

In the last twelve months insiders purchased 820.00k shares for AU$2.1m. On the other hand they divested 4.33m shares, for AU$22m. All up, insiders sold more shares in Pinnacle Investment Management Group than they bought, over the last year. 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!

insider-trading-volume
ASX:PNI Insider Trading Volume December 25th 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Pinnacle Investment Management Group insiders own about AU$485m worth of shares (which is 43% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Pinnacle Investment Management Group Tell Us?

It doesn't really mean much that no insider has traded Pinnacle Investment Management Group shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Pinnacle Investment Management Group insider transactions don't fill us with confidence. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Pinnacle Investment Management Group has 3 warning signs and it would be unwise to ignore them.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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