Insiders' NZ$3.21m Investments In Red Following Pacific Edge's NZ$8.9m Dip In Market Value

Insiders who acquired NZ$3.21m worth of Pacific Edge Limited's (NZSE:PEB) stock at an average price of NZ$0.32 in the past 12 months may be dismayed by the recent 12% price decline. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth NZ$841.0k, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Pacific Edge

The Last 12 Months Of Insider Transactions At Pacific Edge

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Anatole G. Masfen bought NZ$3.1m worth of shares at a price of NZ$1.58 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being NZ$0.083). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Pacific Edge insiders may have bought shares in the last year, but they didn't sell any. They paid about NZ$0.32 on average. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership Of Pacific Edge

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 9.4% of Pacific Edge shares, worth about NZ$6.3m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

What Might The Insider Transactions At Pacific Edge Tell Us?

The fact that there have been no Pacific Edge insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. We'd like to see bigger individual holdings. However, we don't see anything to make us think Pacific Edge insiders are doubting the company. While it's good to be aware of 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. For example, Pacific Edge has 3 warning signs (and 1 which can't be ignored) we think you should know about.

Of course Pacific Edge 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com