With Blue Label Telecoms Up 11%, Insider Buyers Count Their Returns

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 R556m rise in the company's market capitalisation, translating to a gain of 16% on their initial investment. As a result, the stock they originally bought for R7.68m is now worth R8.93m.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Blue Label Telecoms

The Last 12 Months Of Insider Transactions At Blue Label Telecoms

The Co-Founder Mark Levy made the biggest insider purchase in the last 12 months. That single transaction was for R3.0m worth of shares at a price of R5.25 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of R6.10. 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.

While Blue Label Telecoms insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Blue Label Telecoms 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 21% of Blue Label Telecoms shares, worth about R1.1b. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Blue Label Telecoms Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Blue Label Telecoms insiders think the business has merit. 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. For example - Blue Label Telecoms has 1 warning sign we think you should be aware of.

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.