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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 Argentex Group PLC (LON:AGFX), that sends out a positive message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Argentex Group
The Last 12 Months Of Insider Transactions At Argentex Group
The CEO & Director James Ormonde made the biggest insider purchase in the last 12 months. That single transaction was for UK£50k worth of shares at a price of UK£0.77 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.32). Their view may have changed since then, but at least it shows they felt optimistic at the time. 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.
Argentex Group insiders may have bought shares in the last year, but they didn't sell any. Their average price was about UK£0.67. These transactions suggest that insiders have considered the current price attractive. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Argentex Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
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. Insiders own 23% of Argentex Group shares, worth about UK£8.9m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Argentex Group Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Argentex Group shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Argentex Group and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 5 warning signs for Argentex Group (2 make us uncomfortable!) and we strongly recommend you look at these before investing.