It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. 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?
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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
Tinybeans Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Stephen O'Young, sold AU$2.7m worth of shares at a price of AU$2.00 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of AU$0.95. So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid AU$5.2m for 3.06m shares. But insiders sold 3552505 shares worth AU$7.2m. In total, Tinybeans Group insiders sold more than they bought over the last year. The average sell price was around AU$2.02. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is AU$0.95). You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Tinybeans 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. 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 49% of the company, worth about AU$21m. 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?
Insider sales and purchases have netted out over the last three months, so it's hard to draw any conclusion from recent trading. While we gain confidence from high insider ownership of Tinybeans Group, we can't say the same about their transactions in the last year, in the absence of further purchases. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Tinybeans Group. To that end, you should learn about the 5 warning signs we've spotted with Tinybeans Group (including 1 which shouldn't be ignored).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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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. Thank you for reading.
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