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Should You Take Comfort From Insider Transactions At Wellington Drive Technologies Limited (NZSE:WDT)?

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Wellington Drive Technologies Limited (NZSE:WDT).

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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

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See our latest analysis for Wellington Drive Technologies

The Last 12 Months Of Insider Transactions At Wellington Drive Technologies

The Independent Non-Executive Director John McMahon made the biggest insider purchase in the last 12 months. That single transaction was for NZ$146k worth of shares at a price of NZ$0.058 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of NZ$0.078. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

In the last twelve months insiders purchased 4.35m shares for NZ$253k. On the other hand they divested 850.00k shares, for NZ$50k. In total, Wellington Drive Technologies insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

Wellington Drive Technologies is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Wellington Drive Technologies insiders own 16% of the company, worth about NZ$5.5m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Wellington Drive Technologies Insiders?

It doesn't really mean much that no insider has traded Wellington Drive Technologies shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Wellington Drive Technologies insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Wellington Drive Technologies you should know about.

But note: Wellington Drive Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 editorial-team (at) simplywallst.com.