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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 Collins Foods Limited's (ASX:CKF) 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 would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Collins Foods
The Last 12 Months Of Insider Transactions At Collins Foods
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Robert Kaye bought AU$192k worth of shares at a price of AU$8.91 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$8.20). 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. To us, it's very important to consider the price insiders pay for 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. We note that Robert Kaye was both the biggest buyer and the biggest seller.
In the last twelve months insiders purchased 42.14k shares for AU$350k. On the other hand they divested 21.55k shares, for AU$192k. In the last twelve months there was more buying than selling by Collins Foods 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 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).
Insiders At Collins Foods Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Collins Foods, over the last three months. Insiders spent AU$350k on shares. On the other hand, Independent Non-Executive Chairman Robert Kaye netted AU$192k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Collins Foods insiders own about AU$68m worth of shares. That equates to 7.0% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.