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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 Advanced Braking Technology Limited (ASX:ABV), 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 would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Advanced Braking Technology
Advanced Braking Technology Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Keith Knowles, for AU$585k worth of shares, at about AU$0.077 per share. That means that an insider was selling shares at slightly below the current price (AU$0.084). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 12% of Keith Knowles's stake. Keith Knowles was the only individual insider to sell over the last year. Notably Keith Knowles was also the biggest buyer, having purchased AU$1.2m worth of shares.
In the last twelve months insiders purchased 20.86m shares for AU$1.2m. On the other hand they divested 9.20m shares, for AU$675k. In the last twelve months there was more buying than selling by Advanced Braking Technology insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Advanced Braking Technology is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Advanced Braking Technology Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Advanced Braking Technology recently. We note insider Keith Knowles cashed in AU$585k worth of shares. On the flip side, insiders spent AU$432k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Advanced Braking Technology insiders own about AU$14m worth of shares (which is 43% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.