Solvar Insider Sellers Vindicated After 10% Drop

By selling AU$215k worth of Solvar Limited (ASX:SVR) stock at an average sell price of AU$1.05 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by AU$30m after the stock price dropped 10% over the past week, but insiders were spared from painful losses.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Solvar

Solvar Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the CEO, MD & Executive Director, Scott Baldwin, sold AU$215k worth of shares at a price of AU$1.05 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$1.32. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 30% of Scott Baldwin's holding. Scott Baldwin was the only individual insider to sell over the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Solvar better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Solvar Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Solvar. Independent Non-Executive Chairman Stuart Robertson shelled out AU$30k for shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Does Solvar Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Solvar insiders own 3.6% of the company, worth about AU$9.6m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Solvar Tell Us?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. Our analysis of Solvar insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Solvar. When we did our research, we found 4 warning signs for Solvar (2 are potentially serious!) that we believe deserve your full attention.

Of course Solvar may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.