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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Tinybeans Group Limited (ASX:TNY).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
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.’
The Last 12 Months Of Insider Transactions At Tinybeans Group
John McBain made the biggest insider purchase in the last 12 months. That single transaction was for AU$635k worth of shares at a price of AU$1.34 each. That means that even when the share price was higher than AU$1.02 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders paid AU$711k for 659k shares purchased. While Tinybeans Group insiders bought shares last year, they didn’t sell. They paid about AU$1.08 on average. I’d consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Insiders at Tinybeans Group Have Bought Stock Recently
It’s good to see that Tinybeans Group insiders have made notable investments in the company’s shares. John McBain spent AU$635k on stock, and there wasn’t any selling. This makes one think the business has some good points.
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Tinybeans Group insiders own 58% of the company, worth about AU$22m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Tinybeans Group Insiders?
The recent insider purchase is 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. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Tinybeans Group. Looks promising! Along with insider transactions, I recommend checking if Tinybeans Group is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course Tinybeans Group 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.