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Wellfully Limited's (ASX:WFL) recent AU$3.5m market cap decline means a loss of AU$97k for insiders who bought this year

The recent 21% drop in Wellfully Limited's (ASX:WFL) stock could come as a blow to insiders who purchased AU$396k worth of stock at an average buy price of AU$0.07 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$299k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Wellfully

The Last 12 Months Of Insider Transactions At Wellfully

The insider Robert Ovadia made the biggest insider purchase in the last 12 months. That single transaction was for AU$231k worth of shares at a price of AU$0.10 each. That means that an insider was happy to buy shares at above the current price of AU$0.053. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.

While Wellfully insiders bought shares during the last year, they didn't sell. Their average price was about AU$0.07. These transactions suggest that insiders have considered the current price attractive. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

Wellfully is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Wellfully Have Bought Stock Recently

Over the last quarter, Wellfully insiders have spent a meaningful amount on shares. insider Robert Ovadia spent AU$231k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.

Does Wellfully 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Wellfully insiders own about AU$2.1m worth of shares. That equates to 16% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Wellfully Insiders?

The recent insider purchase is 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. Given that insiders also own a fair bit of Wellfully we think they are probably pretty confident of a bright future. 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. At Simply Wall St, we've found that Wellfully has 6 warning signs (4 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.