Adveritas Limited (ASX:AV1) Insiders Increased Their Holdings

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 shareholders might well want to know whether insiders have been buying or selling shares in Adveritas Limited (ASX:AV1).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

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 Adveritas

Adveritas Insider Transactions Over The Last Year

The CEO, MD & Director Mathew Ratty made the biggest insider purchase in the last 12 months. That single transaction was for AU$250k worth of shares at a price of AU$0.17 each. That means that an insider was happy to buy shares at around the current price of AU$0.18. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Adveritas insiders decided to buy shares at close to current prices.

While Adveritas insiders bought shares during the last year, they didn't sell. The average buy price was around AU$0.11. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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

Insiders at Adveritas Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Adveritas. Specifically, Non-Executive Director Mark McConnell bought AU$141k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Insider Ownership of Adveritas

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. Our data indicates that Adveritas insiders own about AU$8.8m worth of shares (which is 14% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.

So What Does This Data Suggest About Adveritas Insiders?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Adveritas insiders are expecting a bright future. While we like knowing 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. Case in point: We've spotted 5 warning signs for Adveritas you should be aware of, and 3 of these are concerning.

But note: Adveritas 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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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.
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