Those following along with Open Text Corporation (NASDAQ:OTEX) will no doubt be intrigued by the recent purchase of shares by Paul Jenkins, Independent Chairman of the Board of the company, who spent a stonking US$8.1m on stock at an average price of US$28.83. Aside from being a solid chunk in its own right, the deft move also saw their holding increase by some 10%.
The Last 12 Months Of Insider Transactions At Open Text
In fact, the recent purchase by Independent Chairman of the Board Paul Jenkins was not their only acquisition of Open Text shares this year. They previously made an even bigger purchase of US$24m worth of shares at a price of US$31.65 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$29.67). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders paid US$43m for 1.38m shares. But insiders sold 35.46k shares worth US$1.6m. Overall, Open Text insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership Of Open Text
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. Open Text insiders own 2.1% of the company, currently worth about US$165m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Open Text Tell Us?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Open Text. Nice! 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 4 warning signs with Open Text and understanding them should be part of your investment process.
Of course Open Text 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, but not derivative transactions.
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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.
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