Insiders who bought AU$252.7k worth of Beacon Lighting Group Limited (ASX:BLX) stock in the last year recovered part of their losses as the stock rose by 10.0% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at AU$38k since the time of purchase.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Over the last year, we can see that the biggest insider purchase was by CEO & Director Glen Robinson for AU$101k worth of shares, at about AU$2.52 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$1.76). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
While Beacon Lighting Group insiders bought shares during the last year, they didn't sell. They paid about AU$2.07 on average. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for Beacon Lighting Group
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Beacon Lighting Group insiders own 57% of the company, currently worth about AU$229m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
The fact that there have been no Beacon Lighting Group insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Beacon Lighting Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Beacon Lighting Group and understanding this should be part of your investment process.
Of course Beacon Lighting 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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.