Are Insiders Buying Sigma Healthcare Limited (ASX:SIG) 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 Sigma Healthcare Limited (ASX:SIG).

What Is Insider Selling?

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.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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'.

Check out our latest analysis for Sigma Healthcare

Sigma Healthcare Insider Transactions Over The Last Year

The CEO, MD & Executive Director Mark Hooper made the biggest insider purchase in the last 12 months. That single transaction was for AU$294k worth of shares at a price of AU$0.59 each. That means that an insider was happy to buy shares at around the current price of AU$0.61. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Sigma Healthcare share holders is that insiders were buying at near the current price.

Sigma Healthcare insiders may have bought shares in the last year, but they didn't sell any. 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!

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

Sigma Healthcare Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Sigma Healthcare. We can see that CEO, MD & Executive Director Mark Hooper paid AU$570k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

Insider Ownership of Sigma Healthcare

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Sigma Healthcare insiders own about AU$15m worth of shares. That equates to 2.6% 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 Sigma Healthcare Insider Transactions Indicate?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of Sigma Healthcare we think they are probably pretty confident of a bright future. 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. Every company has risks, and we've spotted 1 warning sign for Sigma Healthcare you should know about.

But note: Sigma Healthcare 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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