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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Firstwave Cloud Technology Limited (ASX:FCT).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for Firstwave Cloud Technology
Firstwave Cloud Technology Insider Transactions Over The Last Year
The Non-Executive Director, Scott Lidgett, made the biggest insider sale in the last 12 months. That single transaction was for AU$300k worth of shares at a price of AU$0.30 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.24. So it may not tell us anything about how insiders feel about the current share price. Scott Lidgett was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid AU$350k for 1.8m shares. But insiders sold 1.0m shares worth AU$300k. In the last twelve months there was more buying than selling by Firstwave Cloud Technology insiders. Their average price was about AU$0.19. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by 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!
Firstwave Cloud Technology is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Firstwave Cloud Technology Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Firstwave Cloud Technology insiders own 25% of the company, worth about AU$16m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.