Insiders who purchased AU$653k worth of Zimi Limited (ASX:ZMM) shares over the past year recouped some of their losses after price gained 15% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$324k since the time of purchase.
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 Zimi
Zimi Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman of the Board Simon Gerard bought AU$425k worth of shares at a price of AU$0.08 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.039). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Zimi insiders were buying shares, but not selling. 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!
Zimi is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Zimi insiders own about AU$1.7m worth of shares (which is 48% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Zimi Insiders?
The fact that there have been no Zimi insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Zimi insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Zimi. To that end, you should learn about the 5 warning signs we've spotted with Zimi (including 4 which are a bit concerning).