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 SpeedCast International Limited (ASX:SDA).
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.
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. 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’.
SpeedCast International Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Edward Francis Sippel for AU$518k worth of shares, at about AU$4.14 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. It’s not at all bad to see insiders buy shares at or above current prices.
In the last twelve months insiders paid AU$1.3m for 315.66k shares purchased. In the last twelve months there was more buying than selling by SpeedCast International insiders. They paid about AU$4.09 on average. This is nice to see since it implies that insiders might see value around current prices (around AU$3.50). You can see a visual depiction of insider transactions (by 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.
Insider Ownership of SpeedCast International
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. SpeedCast International insiders own about AU$52m worth of shares. That equates to 6.0% 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 SpeedCast International Insider Transactions Indicate?
The fact that there have been no SpeedCast International insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in SpeedCast International and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in SpeedCast International, you should check out this free report on analyst forecasts for the company.
But note: SpeedCast International 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.
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