In This Article:
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 Bowen Coking Coal Limited (ASX:BCB).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
View our latest analysis for Bowen Coking Coal
Bowen Coking Coal Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Matthew Latimore for AU$270k worth of shares, at about AU$0.054 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.097. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Bowen Coking Coal insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Bowen Coking Coal is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Bowen Coking Coal Boast High 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 appears that Bowen Coking Coal insiders own 27% of the company, worth about AU$26m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Bowen Coking Coal Insiders?
The fact that there have been no Bowen Coking Coal insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Bowen Coking Coal insiders are doubting the company, and they do own shares. 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. Case in point: We've spotted 6 warning signs for Bowen Coking Coal you should be aware of, and 3 of them are significant.