Insider Buyers At Flexiroam Likely Disappointed With 40% Slide

Insiders who acquired AU$2.30m worth of Flexiroam Limited's (ASX:FRX) stock at an average price of AU$0.022 in the past 12 months may be dismayed by the recent 40% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$617.7k, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Flexiroam

The Last 12 Months Of Insider Transactions At Flexiroam

In the last twelve months, the biggest single purchase by an insider was when Chief Executive Officer Stephen Picton bought AU$1m worth of shares at a price of AU$0.023 per share. That means that even when the share price was higher than AU$0.006 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

While Flexiroam insiders bought shares during the last year, they didn't sell. 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 small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Flexiroam Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Flexiroam. Specifically, Chief Executive Officer Stephen Picton bought AU$135k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Does Flexiroam Boast High Insider Ownership?

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. Flexiroam insiders own 58% of the company, currently worth about AU$2.8m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Flexiroam Tell Us?

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. When combined with notable insider ownership, these factors suggest Flexiroam insiders are well aligned, and quite possibly think the share price is too low. Nice! While it's good to be aware of 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. Our analysis shows 4 warning signs for Flexiroam (3 make us uncomfortable!) and we strongly recommend you look at these before investing.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.