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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in HGL Limited (ASX:HNG).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
See our latest analysis for HGL
The Last 12 Months Of Insider Transactions At HGL
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Julian Constable bought AU$97k worth of shares at a price of AU$0.46 per share. That means that an insider was happy to buy shares at above the current price of AU$0.43. 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 is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Happily, we note that in the last year insiders bought 236k shares for a total of AU$108k. In the last twelve months HGL insiders were buying shares, but not selling. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
HGL is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of HGL
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that HGL insiders own 33% of the company, worth about AU$8.4m. 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 HGL Insiders?
The fact that there have been no HGL insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in HGL and we see no evidence to suggest they are worried about the future. Along with insider transactions, I recommend checking if HGL is growing revenue. This free chart of historic revenue and earnings should make that easy.