Stock Analysis

Indigo Books & Music Insiders CA$239k Short Of Breakeven On Stock Purchase

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Insiders who bought CA$1.1m worth of Indigo Books & Music Inc. (TSE:IDG) stock in the last year recovered part of their losses as the stock rose by 33% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CA$239k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Indigo Books & Music

The Last 12 Months Of Insider Transactions At Indigo Books & Music

Over the last year, we can see that the biggest insider purchase was by insider Heather Reisman for CA$995k worth of shares, at about CA$2.16 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$1.63). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Heather Reisman was the only individual insider to buy shares in the last twelve months.

Heather Reisman bought 529.30k shares over the last 12 months at an average price of CA$2.08. You can see a visual depiction of insider transactions (by companies and 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!

TSX:IDG Insider Trading Volume September 21st 2023

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.

Insider Ownership

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. We usually like to see fairly high levels of insider ownership. It's great to see that Indigo Books & Music insiders own 61% of the company, worth about CA$27m. 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 Does This Data Suggest About Indigo Books & Music Insiders?

The fact that there have been no Indigo Books & Music insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Indigo Books & Music insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 4 warning signs for Indigo Books & Music (1 is significant!) and we strongly recommend you look at these before investing.

Of course Indigo Books & Music 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 of direct interests only, but not derivative transactions or indirect interests.

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