Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Elmore Limited (ASX:ELE), it sends a favourable message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Elmore Insider Transactions Over The Last Year
Notably, that recent purchase by Peter Diamond is the biggest insider purchase of Elmore 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$0.019). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Elmore insiders may have bought shares in the last year, but they didn't sell any. 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!
Elmore is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Elmore Have Bought Stock Recently
Over the last quarter, Elmore insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought AU$116k worth of shares. This makes one think the business has some good points.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 20% of Elmore shares, worth about AU$2.6m. 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 Elmore Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Elmore we think they are probably pretty confident of a bright future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 5 warning signs for Elmore (3 are a bit unpleasant!) that we believe deserve your full attention.
But note: Elmore 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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.