Stock Analysis

Read This Before Buying Firstwave Cloud Technology Limited (ASX:FCT) Shares

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ASX:FCT
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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Firstwave Cloud Technology Limited (ASX:FCT).

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, rules govern insider transactions, and certain disclosures are required.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

Check out our latest analysis for Firstwave Cloud Technology

Firstwave Cloud Technology Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Scott Lidgett, for AU$300k worth of shares, at about AU$0.30 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.11. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Scott Lidgett.

Over the last year, we can see that insiders have bought 415.80k shares worth AU$58k. But they sold 1000000 shares for AU$300k. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

ASX:FCT Recent Insider Trading, March 26th 2020
ASX:FCT Recent Insider Trading, March 26th 2020

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Firstwave Cloud Technology Insiders Bought Stock Recently

There was some insider buying at Firstwave Cloud Technology over the last quarter. Insiders bought AU$58k worth of shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership of Firstwave Cloud Technology

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Firstwave Cloud Technology insiders own about AU$6.5m worth of shares. That equates to 22% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Firstwave Cloud Technology Insider Transactions Indicate?

It is good to see recent purchasing. However, the longer term transactions are not so encouraging. We don't take much heart from transactions by Firstwave Cloud Technology insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. In short they are likely aligned with shareholders. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Firstwave Cloud Technology. Case in point: We've spotted 6 warning signs for Firstwave Cloud Technology you should be aware of, and 2 of them are significant.

Of course Firstwave Cloud Technology 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

About ASX:FCT

Firstwave Cloud Technology

Firstwave Cloud Technology Limited develops and sells Internet security software in Australia and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth2
Past Performance0
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Adequate balance sheet with limited growth.