We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in ApplyDirect Limited (ASX:AD1).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.

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.’

See our latest analysis for ApplyDirect

ApplyDirect Insider Transactions Over The Last Year

Non-Executive Chairman Michael Graham Kay made the biggest insider purchase in the last 12 months. That single transaction was for AU$100k worth of shares at a price of AU$0.09 each. That means that even when the share price was higher, an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.

In the last twelve months insiders paid AU$245k for 2.72m shares purchased. Overall, ApplyDirect insiders were net buyers last year. The average buy price was around AU$0.09. These transactions suggest that insiders have considered the current price of AU$0.023 attractive. You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

ApplyDirect Insiders Bought Stock Recently

There was some insider buying at ApplyDirect over the last quarter. Director Michael Norster shelled out AU$20k for shares in that time. It’s great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Insider Ownership of ApplyDirect

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. ApplyDirect insiders own 30% of the company, currently worth about AU$1.7m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.