We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in OFX Group Limited (ASX:OFX).
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, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At OFX Group
Over the last year, we can see that the biggest insider purchase was by insider Matthew Gilmour for AU$299k worth of shares, at about AU$1.02 per share. That implies that an insider found the current price of AU$1.15 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.
OFX Group insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$1.16. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
OFX Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at OFX Group Have Bought Stock Recently
We saw some OFX Group insider buying shares in the last three months. CEO, MD & Executive Director John Malcolm purchased AU$50k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
Does OFX Group Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 9.8% of OFX Group shares, worth about AU$27m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At OFX Group Tell Us?
We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think OFX Group insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing OFX Group. To that end, you should learn about the 2 warning signs we've spotted with OFX Group (including 1 which makes us a bit uncomfortable).
Of course OFX Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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