We often see insiders buying stocks in companies that perform well over the long term. On the other hand, we would be remiss not to mention that insider selling is known to precede tough times for a business. So before you buy or sell ECP Emerging Growth Limited (ASX: ECP), you might want to know if any insiders have bought or sold.
What is insider selling?
Most investors know that it’s okay for business leaders, such as board directors, to buy and sell company stock. However, most countries require the company to disclose these transactions to the market.
We don’t believe shareholders should just follow insider trading. But it makes perfect sense to keep an eye on what insiders are doing. As Peter Lynch said, “Insiders can sell their shares for any number of reasons, but they buy them for one only: they think the price will go up.”
Check out our latest analysis for ECP Emerging Growth
ECP Emerging Growth Insider Trading in the Last Year
Insider Emmanuel Pohl made the largest insider buy in the past 12 months. This single transaction involved AU $ 288,000 of shares at a price of AU $ 1.00 each. Even though the purchase was made at a much lower price than the recent price (AU $ 1.50), we still believe insider buying is positive. Because the shares were bought at a lower price, this particular purchase doesn’t tell us much about what insiders think about the current share price.
The chart below shows insider trading (by companies and individuals) over the past year. If you click on the chart, you can see all of the individual trades including the stock price, individual and date!
ECP Emerging Growth is not the only one to buy. So take a look at this free list of growing companies with insider buying.
Many investors like to check how well a company is owned by insiders. I think it’s a good sign if there are insiders who own a significant number of shares in the company. It’s great to see that ECP Emerging Growth insiders own 42% of the company, worth around AU $ 12 million. Most shareholders would be happy to see this type of insider ownership, as it suggests that management’s incentives are well aligned with those of other shareholders.
So what does this data suggest about ECP Emerging Growth insiders?
We certainly don’t mind the fact that there haven’t been any recent ECP Emerging Growth insider trading. But insiders have shown a greater appetite for action over the past year. With high insider participation and encouraging transactions, it looks like insiders at ECP Emerging Growth think the company has merit. So these insider trading can help us build a thesis on the stock, but it’s also worth knowing the risks this company faces. Concrete example: we have spotted 4 warning signs for ECP Emerging Growth you must be aware of it, and one of them cannot be ignored.
Of course, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies.
For the purposes of this article, insiders are the people who report their transactions to the relevant regulatory body. We currently record open market transactions and private assignments, but not derivative transactions.
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This Simply Wall St article is general in nature. It is not a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in the mentioned stocks.
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