Yahoo Finance Did Terragen Holdings Limited (ASX:TGH) Insiders Buy Up More Shares?
It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Terragen Holdings Limited (ASX:TGH).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
View our latest analysis for Terragen Holdings
Terragen Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Scobie Ward bought AU$1.8m worth of shares at a price of AU$0.41 per share. That means that even when the share price was higher than AU$0.25 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 17.66m shares for AU$6.5m. On the other hand they divested 320.00k shares, for AU$109k. In total, Terragen Holdings insiders bought more than they sold over the last year. Their average price was about AU$0.37. I'd consider this a positive as it suggests insiders see value at around the current price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Terragen Holdings Insiders Bought Stock Recently
It's good to see that Terragen Holdings insiders have made notable investments in the company's shares. Overall, two insiders shelled out AU$1.4m for shares in the company -- and none sold. This makes one think the business has some good points.
Does Terragen Holdings Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Terragen Holdings insiders own about AU$16m worth of shares. That equates to 33% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Terragen Holdings Insiders?
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. When combined with notable insider ownership, these factors suggest Terragen Holdings insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Terragen Holdings. At Simply Wall St, we've found that Terragen Holdings has 5 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.
But note: Terragen Holdings 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, but not derivative transactions.
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. 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.
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