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 before you buy or sell Absolute Software Corporation (TSE:ABT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
See our latest analysis for Absolute Software
Absolute Software Insider Transactions Over The Last Year
There wasn't any very large single transaction over the last year, but we can still observe some trading.
In the last twelve months insiders purchased 4.80k shares for CA$39k. But they sold 7219 shares for CA$75k. Over the last year we saw more insider selling of Absolute Software shares, than buying. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Absolute Software better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Absolute Software Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Absolute Software shares. In total, insiders dumped CA$75k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Absolute Software
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. Based on our data, Absolute Software insiders have about 0.9% of the stock, worth approximately CA$3.5m. I generally like to see higher levels of ownership.
What Might The Insider Transactions At Absolute Software Tell Us?
Insiders haven't bought Absolute Software stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. On the plus side, Absolute Software makes money, and is growing profits. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. While we like knowing 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. Every company has risks, and we've spotted 3 warning signs for Absolute Software (of which 1 is a bit unpleasant!) you should know about.
Of course Absolute Software 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, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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