Are Insiders Buying The Food Revolution Group Limited (ASX:FOD) Stock?

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 The Food Revolution Group Limited (ASX:FOD).

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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Food Revolution Group

The Last 12 Months Of Insider Transactions At Food Revolution Group

Over the last year, we can see that the biggest insider purchase was by Independent Non Executive Director Matthew Bailey for AU$100k worth of shares, at about AU$0.035 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.031). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Food Revolution Group insiders may have bought shares in the last year, but they didn't sell any. They paid about AU$0.041 on average. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Food Revolution Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Food Revolution Group Insiders Bought Stock Recently

It's good to see that Food Revolution Group insiders have made notable investments in the company's shares. Specifically, Independent Non Executive Director Matthew Bailey bought AU$100k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Does Food Revolution Group Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Food Revolution Group insiders own about AU$8.5m worth of shares. That equates to 32% 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.

So What Do The Food Revolution 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 Food Revolution Group shares, given these transactions (along with notable insider ownership of the company). 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. Be aware that Food Revolution Group is showing 4 warning signs in our investment analysis, and 1 of those is significant...

But note: Food Revolution 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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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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