Insiders sitting comfortably on a S$154k profit after buying Olam Group Limited (SGX:VC2) stock worth S$3.8m last year

Insiders who purchased Olam Group Limited (SGX:VC2) shares in the past 12 months are unlikely to be deeply impacted by the stock's 3.0% decline over the past week. Even after accounting for the recent loss, the S$3.8m worth of stock purchased by them is now worth S$4.0m or in other words, their investment continues to give good returns.

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.

Check out our latest analysis for Olam Group

The Last 12 Months Of Insider Transactions At Olam Group

In the last twelve months, the biggest single purchase by an insider was when Co-Founder Sunny George Verghese bought S$780k worth of shares at a price of S$1.56 per share. That means that an insider was happy to buy shares at around the current price of S$1.59. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Olam Group insider decided to buy shares at close to current prices. Sunny George Verghese was the only individual insider to buy during the last year.

Sunny George Verghese bought a total of 2.50m shares over the year at an average price of S$1.53. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Olam Group insiders own 4.4% of the company, worth about S$268m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Olam Group Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Olam Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. 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. To help with this, we've discovered 2 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Olam Group.

But note: Olam Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

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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.