Multiple insiders bought Orica Limited (ASX:ORI) stock earlier this year, a positive sign for shareholders

By
Simply Wall St
Published
January 07, 2022
ASX:ORI
Source: Shutterstock

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 Orica Limited (ASX:ORI), it sends a favourable message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Orica

Orica Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Boon Foo for AU$250k worth of shares, at about AU$15.62 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$13.40). 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. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Orica 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:ORI Insider Trading Volume January 7th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Orica Insiders Bought Stock Recently

Over the last quarter, Orica insiders have spent a meaningful amount on shares. We can see that Independent Non-Executive Director Boon Foo paid AU$250k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Does Orica 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. Insiders own 0.2% of Orica shares, worth about AU$9.9m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

What Might The Insider Transactions At Orica Tell Us?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Orica stock. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Orica.

Of course Orica 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, but not derivative transactions.

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