Yahoo Finance Should You Take Comfort From Insider Transactions At Namoi Cotton Limited (ASX:NAM)?
We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Namoi Cotton Limited (ASX:NAM), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for Namoi Cotton
Namoi Cotton Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman Tim Watson for AU$205k worth of shares, at about AU$0.40 per share. That means that even when the share price was higher than AU$0.33 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Tim Watson was the only individual insider to buy shares in the last twelve months.
Tim Watson purchased 976.20k shares over the year. The average price per share was AU$0.38. You can see the insider transactions (by 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!
Namoi Cotton is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Namoi Cotton
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Namoi Cotton insiders own about AU$4.0m worth of shares (which is 8.1% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Namoi Cotton Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Namoi Cotton shares in the last quarter. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Namoi Cotton stock. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Namoi Cotton. When we did our research, we found 3 warning signs for Namoi Cotton (1 makes us a bit uncomfortable!) that we believe deserve your full attention.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
