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We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in 8common Limited (ASX:8CO).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
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’.
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The Last 12 Months Of Insider Transactions At 8common
Over the last year, we can see that the biggest insider sale was by Founder Kah Wui Lim for AU$333k worth of shares, at about AU$0.04 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of AU$0.031. So it is hard to draw any strong conclusion from it. Kah Wui Lim was the only individual insider to sell over the last year.
You can see the insider transactions (by 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 38% of 8common shares, worth about AU$1.9m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The 8common Insider Transactions Indicate?
An insider hasn’t bought 8common stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn’t show any insider buying. While insiders do own shares, they don’t own a heap, and they have been selling. So we’d only buy after careful consideration. Along with insider transactions, I recommend checking if 8common is growing revenue. This free chart of historic revenue and earnings should make that easy.