Insiders Re-Evaluate Their US$1.75m Stock Purchase As Ambac Financial Group Falls To US$493m

The recent 16% drop in Ambac Financial Group, Inc.'s (NYSE:AMBC) stock could come as a blow to insiders who purchased US$1.75m worth of stock at an average buy price of US$11.06 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$1.54m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Ambac Financial Group

The Last 12 Months Of Insider Transactions At Ambac Financial Group

Over the last year, we can see that the biggest insider purchase was by Independent Director Michael Price for US$1m worth of shares, at about US$11.21 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$9.71). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. 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 Ambac Financial Group insiders were buying shares, but not selling. 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!

Ambac Financial Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Ambac Financial Group insiders own 2.8% of the company, worth about US$14m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Ambac Financial Group Tell Us?

It doesn't really mean much that no insider has traded Ambac Financial Group shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Ambac Financial Group and their transactions don't cause us concern. 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. In terms of investment risks, we've identified 1 warning sign with Ambac Financial Group and understanding this should be part of your investment process.

Of course Ambac Financial 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.