Finbond Group Reaches R286m Market Cap Benefiting Insider Stock Buying

Last week, Finbond Group Limited (JSE:FGL) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 13% last week, resulting in a R32m increase in the company's market worth, implying a 20% gain on their initial purchase. Put another way, the original R6.05m acquisition is now worth R7.25m.

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.

View our latest analysis for Finbond Group

Finbond Group Insider Transactions Over The Last Year

The Independent Non-Executive Director Sean Riskowitz made the biggest insider purchase in the last 12 months. That single transaction was for R5.3m worth of shares at a price of R0.30 each. Even though the purchase was made at a significantly lower price than the recent price (R0.36), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Finbond Group insiders may have bought shares in the last year, but they didn't sell any. 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).

Finbond Group Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Finbond Group. Overall, two insiders shelled out R6.0m for shares in the company -- and none sold. That shows some optimism about the company's future.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Our data suggests Finbond Group insiders own 4.7% of the company, worth about R13m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We prefer to see high levels of insider ownership.

So What Do The Finbond Group Insider Transactions Indicate?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Finbond Group shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Finbond Group. Our analysis shows 3 warning signs for Finbond Group (1 is a bit concerning!) and we strongly recommend you look at these before investing.

But note: Finbond 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 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.