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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Tamawood Limited (ASX:TWD).
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
View our latest analysis for Tamawood
The Last 12 Months Of Insider Transactions At Tamawood
Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Lev Mizikovsky for AU$422k worth of shares, at about AU$4.22 per share. That means that an insider was happy to buy shares at above the current price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We generally consider it a positive if insiders have been buying on market, even above the current price.
In the last twelve months insiders paid AU$1.4m for 376.63k shares purchased. In total, Tamawood insiders bought more than they sold over the last year. Their average price was about AU$3.76. Although they bought at below the recent price of AU$4.08 per share, it is good to see that insiders are willing to invest in the company. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Tamawood Have Bought Stock Recently
It’s good to see that Tamawood insiders have made notable investments in the company’s shares. We can see that Lev Mizikovsky paid AU$549k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. It’s great to see that Tamawood insiders own 57% of the company, worth about AU$58m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.