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. Shareholders might therefore want to know if any insiders bought or sold shares of Fertoz Limited (ASX: FTZ).
What is insider selling?
It is perfectly legal for company insiders, including board members, to buy and sell shares in a company. However, there are rules governing insider trading and certain disclosures are required.
We never suggest that investors base their decisions solely on what the directors of a company have done. 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.”
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Fertoz Insider Transactions in the Last Year
Non-executive director Stuart Richardson made the biggest insider buy in the past 12 months. This single transaction involved AU $ 129,000 in shares at a price of AU $ 0.06 each. This implies that an insider found the current price of AU $ 0.06 per share attractive. If their perspective may have changed since the purchase, it at least suggests that they had confidence in the future of the business. While we still love to see insider buys, it’s less meaningful if the buys were made at much lower prices, as the opportunity they saw may be passed. In this case, we are happy to report that insider buys were made at prices close to current prices.
While Fertoz insiders bought stocks over the past year, they didn’t sell them. Below you can see a visual representation of insider trading (by businesses and individuals) over the past 12 months. If you click on the chart, you can see all of the individual trades including the stock price, individual and date!
There are always a lot of stocks that insiders buy. So if it suits your style, you can check each stock one by one or you can take a look at this free list of companies. (Hint: insiders bought them).
I like to look at the number of shares held by insiders in a company, to help inform my view of their alignment with insiders. I think it’s a good sign if there are insiders who own a significant number of shares in the company. Insiders own 19% of Fertoz shares, worth around AU $ 1.8 million. We have certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest an alignment between insiders and other shareholders.
What could insider trading at Fertoz tell us?
It doesn’t really mean much that no insider traded Fertoz shares in the past quarter. But insiders have shown a greater appetite for action over the past year. Insiders own shares in Fertoz and we see no evidence to suggest they are worried about the future. So, while it is useful to know what insiders are doing in terms of buying or selling, it is also useful to know the risks that a particular company faces. Concrete example: we have spotted 4 warning signs for Fertoz you need to be aware of this, and 2 of them are potentially serious.
If you’d rather consult with another company – one with potentially superior finances – don’t miss this free list of interesting companies, which have high return on equity and low debt.
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 any of the stocks mentioned.
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