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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Enghouse Systems Limited's (TSE:ENGH) instance, it's good news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Enghouse Systems
Enghouse Systems Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Paul Stoyan, for CA$216k worth of shares, at about CA$27.00 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of CA$27.88. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 9.1% of Paul Stoyan's holding. Notably Paul Stoyan was also the biggest buyer, having purchased CA$307k worth of shares.
In the last twelve months insiders purchased 11.11k shares for CA$307k. But they sold 9.50k shares for CA$262k. In total, Enghouse Systems insiders bought more than they sold over the last year. 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!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Are Enghouse Systems Insiders Buying Or Selling?
In the last quarter there were insider sales totalling CA$216k. However that only slightly eclipses the CA$214k worth of purchases. The net selling is so small that it's hard to draw any conclusions from these recent transactions.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Enghouse Systems insiders own 18% of the company, worth about CA$267m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.