We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Indigo Books & Music Inc. (TSE:IDG).
Do Insider Transactions Matter?
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 it is perfectly logical to keep tabs on what insiders are doing. 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’.
The Last 12 Months Of Insider Transactions At Indigo Books & Music
In the last twelve months, the biggest single purchase by an insider was when Non-Independent Director Gerald Schwartz bought CA$96k worth of shares at a price of CA$19.29 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
In the last twelve months insiders paid CA$346k for 17.90k shares purchased. In the last twelve months there was more buying than selling by Indigo Books & Music insiders. Their average price was about CA$19.35. This is nice to see since it implies that insiders might see value around current prices (around CA$10.07). 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 29% of Indigo Books & Music shares, worth about CA$80m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Indigo Books & Music Insider Transactions Indicate?
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. Insiders do have a stake in Indigo Books & Music and their transactions don’t cause us concern. Of course, the future is what matters most. So if you are interested in Indigo Books & Music, you should check out this free report on analyst forecasts for the company.
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.
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