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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in LifeSpeak Inc.'s (TSE:LSPK) case, it's fantastic news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for LifeSpeak
LifeSpeak Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Non-Independent Executive Chairman Nolan Bederman for CA$500k worth of shares, at about CA$0.61 per share. That means that an insider was happy to buy shares at above the current price of CA$0.32. 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. We always take careful note of the price insiders pay when purchasing shares. 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.
LifeSpeak insiders may have bought shares in the last year, but they didn't sell any. 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!
LifeSpeak is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership Of LifeSpeak
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. LifeSpeak insiders own about CA$5.0m worth of shares. That equates to 29% of the company. 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 LifeSpeak Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think LifeSpeak 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. In terms of investment risks, we've identified 4 warning signs with LifeSpeak and understanding these should be part of your investment process.