Have Insiders Been Buying Flexiroam Limited (ASX:FRX) Shares?

We often see insiders buying up shares in companies that perform well over the long term. 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 Flexiroam Limited (ASX:FRX).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

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'.

See our latest analysis for Flexiroam

Flexiroam Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Yip Ng Kay for AU$267k worth of shares, at about AU$0.014 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.027), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Over the last year, we can see that insiders have bought 26.72m shares worth AU$267k. But insiders sold 461.00k shares worth AU$7.1k. Overall, Flexiroam insiders were net buyers during the last year. Their average price was about AU$0.01. It is certainly positive to see 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Flexiroam is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of Flexiroam

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. Flexiroam insiders own about AU$8.2m worth of shares (which is 55% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Flexiroam Insider Transactions Indicate?

The fact that there have been no Flexiroam insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Flexiroam insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Flexiroam. At Simply Wall St, we've found that Flexiroam has 4 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

Of course Flexiroam 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.

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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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