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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 The Colonial Motor Company Limited (NZSE:CMO), that sends out a positive message to the company's 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 Colonial Motor
Colonial Motor Insider Transactions Over The Last Year
The Director, John Hutchinson, made the biggest insider sale in the last 12 months. That single transaction was for NZ$396k worth of shares at a price of NZ$8.80 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of NZ$6.82. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was John Hutchinson.
In the last twelve months insiders purchased 57.00k shares for NZ$491k. But they sold 45.00k shares for NZ$396k. In the last twelve months there was more buying than selling by Colonial Motor insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership
Many investors like to check how much of a company is owned by 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. It's great to see that Colonial Motor insiders own 73% of the company, worth about NZ$163m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Colonial Motor Insiders?
It doesn't really mean much that no insider has traded Colonial Motor shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Colonial Motor insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Colonial Motor. For example, Colonial Motor has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.