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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Pental Limited's (ASX:PTL) instance, it's good news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Pental Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Chairman Mark Hardgrave bought AU$100k worth of shares at a price of AU$0.38 per share. That implies that an insider found the current price of AU$0.40 per share to be enticing. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.
While Pental insiders bought shares during the last year, they didn't sell. 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!
Pental is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Pental Insiders Bought Stock Recently
Over the last quarter, Pental insiders have spent a meaningful amount on shares. Overall, five insiders shelled out AU$311k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Pental
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 27% of Pental shares, worth about AU$18m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Pental Tell Us?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Pental insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Pental. Every company has risks, and we've spotted 3 warning signs for Pental you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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. 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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