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Quite a few insiders have dramatically grown their holdings in Terragen Holdings Limited (ASX:TGH) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
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.
Check out our latest analysis for Terragen Holdings
The Last 12 Months Of Insider Transactions At Terragen Holdings
In the last twelve months, the biggest single purchase by an insider was when insider Scobie Dickinson Ward bought AU$2.0m worth of shares at a price of AU$0.024 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.013). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Terragen Holdings 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!
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).
Insider Ownership
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. Terragen Holdings insiders own about AU$2.0m 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.
So What Do The Terragen Holdings Insider Transactions Indicate?
The fact that there have been no Terragen Holdings insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Terragen Holdings insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 4 warning signs for Terragen Holdings you should be aware of, and 3 of these are potentially serious.