Favourable Signals For Good Drinks Australia: Numerous Insiders Acquired Stock

Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Good Drinks Australia Limited (ASX:GDA), it sends a favourable message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Good Drinks Australia

Good Drinks Australia Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Co-Founder John Hoedemaker for AU$106k worth of shares, at about AU$0.25 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$0.26. 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. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.

While Good Drinks Australia insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Good Drinks Australia 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.

Insiders At Good Drinks Australia Have Bought Stock Recently

It's good to see that Good Drinks Australia insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought AU$206k worth of shares. That shows some optimism about the company's future.

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. Insiders own 22% of Good Drinks Australia shares, worth about AU$7.5m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Good Drinks Australia Tell Us?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Good Drinks Australia shares, given these transactions (along with notable insider ownership of the company). While it's good to be aware of 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. Every company has risks, and we've spotted 3 warning signs for Good Drinks Australia (of which 1 is significant!) you should know about.

But note: Good Drinks Australia 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com