It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Sanford Limited's (NZSE:SAN) 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Sanford

The Last 12 Months Of Insider Transactions At Sanford

The Independent Non-Executive Director Mark Cairns made the biggest insider purchase in the last 12 months. That single transaction was for NZ$147k worth of shares at a price of NZ$4.89 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being NZ$4.25). 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. In our view, the price an insider pays for shares is very important. 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.

Sanford insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. 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. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

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 Sanford insiders own 7.6% of the company, worth about NZ$30m. 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 Do The Sanford Insider Transactions Indicate?

The fact that there have been no Sanford insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Sanford and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Sanford. You'd be interested to know, that we found 1 warning sign for Sanford and we suggest you have a look.