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Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of FAR Limited (ASX:FAR), that sends out a positive message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for FAR
The Last 12 Months Of Insider Transactions At FAR
In the last twelve months, the biggest single purchase by an insider was when insider Joseph Oyaski bought AU$371k worth of shares at a price of AU$0.41 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.50. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Over the last year, we can see that insiders have bought 1.93m shares worth AU$834k. On the other hand they divested 172.92k shares, for AU$81k. In total, FAR insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
FAR is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
FAR Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at FAR. We can see that insider Joseph Oyaski paid AU$413k for shares in the company. On the other hand, insider Joseph Oyaski netted AU$81k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that FAR insiders own 12% of the company, worth about AU$5.5m. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At FAR Tell Us?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that FAR insiders are expecting 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. For example, FAR has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.