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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Australian Finance Group Limited (ASX:AFG), it sends a favourable message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Australian Finance Group
Australian Finance Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Chair Greg Medcraft for AU$75k worth of shares, at about AU$1.49 per share. That means that an insider was happy to buy shares at above the current price of AU$1.33. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
While Australian Finance Group insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership Of Australian Finance Group
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 Australian Finance Group insiders own 23% of the company, worth about AU$83m. 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 Australian Finance Group Tell Us?
The fact that there have been no Australian Finance Group insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Australian Finance Group and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Australian Finance Group. For instance, we've identified 2 warning signs for Australian Finance Group (1 makes us a bit uncomfortable) you should be aware of.