Abundante's Market Cap Drops To S$21m Leaving Insiders With Losses

The recent price decline of 22% in Abundante Limited's (SGX:570) stock may have disappointed insiders who bought S$5.29m worth of shares at an average price of S$0.21 in the past 12 months. 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 S$4.03m, 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 Abundante

The Last 12 Months Of Insider Transactions At Abundante

The insider Tingting Xun made the biggest insider purchase in the last 12 months. That single transaction was for S$2.8m worth of shares at a price of S$0.21 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being S$0.16). 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. 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.

In the last twelve months insiders purchased 25.20m shares for S$5.3m. But insiders sold 15.75m shares worth S$3.3m. In the last twelve months there was more buying than selling by Abundante insiders. You can see a visual depiction of insider transactions (by companies and 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!

Abundante is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Abundante Insiders Bought Stock Recently

At Abundante,over the last quarter, we have observed quite a lot more insider buying than insider selling. insider Tingting Xun spent S$4.1m on stock. On the other hand, insiders netted S$3.3m by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Does Abundante Boast High 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. Abundante insiders own 100% of the company, currently worth about S$21m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Abundante Insiders?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Abundante insiders are well aligned, and quite possibly think the share price is too low. Looks promising! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 3 warning signs we've spotted with Abundante (including 1 which is a bit concerning).

But note: Abundante 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 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.