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Even if it's not a huge purchase, we think it was good to see that Lawrence Jackson, the Non-Executive Chairman of Predictive Discovery Limited (ASX:PDI) recently shelled out AU$56k to buy stock, at AU$0.21 per share. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.
The Last 12 Months Of Insider Transactions At Predictive Discovery
Notably, that recent purchase by Lawrence Jackson is the biggest insider purchase of Predictive Discovery shares that we've seen in the last year. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.20). 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 insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Predictive Discovery insiders were buying shares, but not selling. The average buy price was around AU$0.12. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price of AU$0.20. 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!
Predictive Discovery is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Predictive Discovery insiders own about AU$39m worth of shares. That equates to 14% 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 Do The Predictive Discovery Insider Transactions Indicate?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. 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 Predictive Discovery insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 4 warning signs for Predictive Discovery (3 are a bit unpleasant!) and we strongly recommend you look at them before investing.
But note: Predictive Discovery 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.
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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.