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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 shareholders might well want to know whether insiders have been buying or selling shares in

Adslot Limited

(

ASX:ADJ

).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University

study

found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

Check out our latest analysis for Adslot

Adslot Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Peter Diamond for AU$3.0m worth of shares, at about AU$0.047 per share. That means that an insider was happy to buy shares at above the current price. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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$5.0m for 134.00m shares purchased. In the last twelve months there was more buying than selling by Adslot insiders. Their average price was about AU$0.038. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of AU$0.04. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

ASX:ADJ Insider Trading February 1st 19

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.

Adslot Insiders Bought Stock Recently

Over the last three months, we’ve seen significant insider buying at Adslot. Specifically, Peter Diamond bought AU$316k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.

Story continues

Does Adslot Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Adslot insiders own about AU$16m worth of shares. That equates to 25% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

So What Do The Adslot Insider Transactions Indicate?

It’s certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Adslot we think they are probably pretty confident of a bright future. Along with insider transactions, I recommend checking if Adslot is growing revenue. This free chart of

historic revenue and earnings should make that easy

.

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

[email protected]

.

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