Insiders who bought AU$317k worth of Live Verdure Ltd (ASX:LV1) stock in the last year recovered part of their losses as the stock rose by 13% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$107k since the time of purchase.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Live Verdure
Over the last year, we can see that the biggest insider purchase was by insider Andrew Wilson for AU$188k worth of shares, at about AU$0.45 per share. That means that an insider was happy to buy shares at above the current price of AU$0.17. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for 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. Andrew Wilson was the only individual insider to buy during the last year.
Andrew Wilson purchased 1.20m shares over the year. The average price per share was AU$0.26. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Does Live Verdure Boast High 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. Live Verdure insiders own about AU$3.3m worth of shares. That equates to 34% 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 Live Verdure Insider Transactions Indicate?
The fact that there have been no Live Verdure insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Live Verdure insiders are doubting the company, and they do own shares. 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 instance, we've identified 5 warning signs for Live Verdure (4 shouldn't be ignored) you should be aware of.
But note: Live Verdure 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.