ZOO Digital Group Gains 16%, Insider Trades Reap Benefit

ZOO Digital Group plc (LON:ZOO) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 16%, resulting in a UK£4.9m rise in the company's market capitalisation, translating to a gain of 13% on their initial investment. As a result, the stock they originally bought for US$109.8k is now worth US$123.7k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for ZOO Digital Group

The Last 12 Months Of Insider Transactions At ZOO Digital Group

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Gillian Wilmot bought UK£60k worth of shares at a price of UK£0.38 per share. That means that an insider was happy to buy shares at above the current price of UK£0.37. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

While ZOO Digital Group insiders bought shares during the last year, they didn't sell. Their average price was about UK£0.33. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

ZOO Digital Group is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does ZOO Digital Group Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that ZOO Digital Group insiders own 13% of the company, worth about UK£4.6m. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About ZOO Digital Group Insiders?

The fact that there have been no ZOO Digital Group insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think ZOO Digital Group insiders are doubting the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, ZOO Digital Group has 4 warning signs (and 2 which are concerning) we think you should know about.

Of course ZOO Digital Group 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.