Blue Label Telecoms Gains 11%, Insider Trades Reap Benefit

Blue Label Telecoms Limited (JSE:BLU) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 11%, resulting in a R283m rise in the company's market capitalisation, translating to a gain of 13% on their initial investment. Put another way, the original R3.81m acquisition is now worth R4.29m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Blue Label Telecoms

Blue Label Telecoms Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Co-Founder Mark Levy for R3.8m worth of shares, at about R2.85 per share. Even though the purchase was made at a significantly lower price than the recent price (R3.18), we still think insider buying is a positive. 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.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Blue Label Telecoms is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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. Blue Label Telecoms insiders own about R971m worth of shares. That equates to 35% of the company. 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 Blue Label Telecoms Tell Us?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Blue Label Telecoms. Looks promising! 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. Case in point: We've spotted 4 warning signs for Blue Label Telecoms you should be aware of, and 2 of these are significant.

Of course Blue Label Telecoms 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.