Need To Know: Damstra Holdings Limited (ASX:DTC) Insiders Have Been Selling Shares

We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Damstra Holdings Limited (ASX:DTC), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Damstra Holdings

The Last 12 Months Of Insider Transactions At Damstra Holdings

The Non-Executive Director, Drew Fairchild, made the biggest insider sale in the last 12 months. That single transaction was for AU$1.1m worth of shares at a price of AU$2.26 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of AU$1.35. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Drew Fairchild.

In the last twelve months insiders purchased 371.50k shares for AU$303k. But insiders sold 500.00k shares worth AU$1.1m. 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!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Damstra Holdings Boast High Insider Ownership?

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. Insiders own 35% of Damstra Holdings shares, worth about AU$88m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Damstra Holdings Insider Transactions Indicate?

The fact that there have been no Damstra Holdings insider transactions recently certainly doesn't bother us. Still, the insider transactions at Damstra Holdings in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Damstra Holdings has 2 warning signs and it would be unwise to ignore these.

But note: Damstra Holdings 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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