We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Spirit Telecom Limited (ASX:ST1).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
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The Last 12 Months Of Insider Transactions At Spirit Telecom
In the last twelve months, the biggest single purchase by an insider was when Peter Diamond bought AU$2.2m worth of shares at a price of AU$0.19 per share. That means that even when the share price was higher, 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. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders bought 33.68m shares for a total of AU$6.8m. Overall, Spirit Telecom insiders were net buyers last year. They paid about AU$0.20 on average. These transactions suggest that insiders have considered the current price of AU$0.17 attractive. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Spirit Telecom Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Spirit Telecom. Specifically, Peter Diamond bought AU$944k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Spirit Telecom insiders own 67% of the company, currently worth about AU$27m 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.
So What Do The Spirit Telecom Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Spirit Telecom. Nice! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Spirit Telecom.
Of course Spirit Telecom may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.