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 oOh!media Limited (ASX:OML).
Do Insider Transactions Matter?
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At oOh!media
The CEO, MD & Executive Director Brendon Cook made the biggest insider purchase in the last 12 months. That single transaction was for AU$607k worth of shares at a price of AU$0.53 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.88. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
While oOh!media insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
oOh!media Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at oOh!media. Overall, six insiders shelled out AU$754k for shares in the company -- and none sold. This makes one think the business has some good points.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, oOh!media insiders have about 0.6% of the stock, worth approximately AU$3.2m. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About oOh!media Insiders?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that oOh!media insiders are reasonably well aligned, and optimistic for the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. When we did our research, we found 6 warning signs for oOh!media (2 are a bit unpleasant!) that we believe deserve your full attention.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.