It is not uncommon to see companies perform well in the years after insiders buy shares. 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 EVZ Limited (ASX:EVZ).

What Is Insider Selling?

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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’

Check out our latest analysis for EVZ

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The Last 12 Months Of Insider Transactions At EVZ

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Robert Edgley bought AU$2.5m worth of shares at a price of AU$29.00 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.

Over the last year, we can see that insiders have bought 661.50k shares worth AU$2.6m. Overall, EVZ insiders were net buyers last year. They paid about AU$3.97 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$0.31. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does EVZ Boast High 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. It appears that EVZ insiders own 18% of the company, worth about AU$5.4m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At EVZ Tell Us?

The fact that there have been no EVZ insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Overall we don’t see anything to make us think EVZ insiders are doubting the company, and they do own shares. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.