With Ooma Up 11%, Insider Buyers Count Their Returns

Ooma, Inc. (NYSE:OOMA) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a US$42m addition to the company’s market value. In other words, the original US$148.9k purchase is now worth US$240.6k.

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 Ooma

The Last 12 Months Of Insider Transactions At Ooma

Over the last year, we can see that the biggest insider purchase was by President Eric Stang for US$98k worth of shares, at about US$9.85 per share. We do like to see buying, but this purchase was made at well below the current price of US$16.04. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Eric Stang purchased 15.00k shares over the year. The average price per share was US$9.93. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 8.2% of Ooma shares, worth about US$34m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Ooma Tell Us?

It doesn't really mean much that no insider has traded Ooma 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 Ooma and their transactions don't cause us concern. 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. You'd be interested to know, that we found 1 warning sign for Ooma and we suggest you have a look.

But note: Ooma 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.