Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Develop Global Limited (ASX:DVP), it sends a favourable message to the company's shareholders.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Develop Global Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when MD & Director William Beament bought AU$297k worth of shares at a price of AU$3.30 per share. That means that an insider was happy to buy shares at above the current price of AU$2.90. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.
Develop Global insiders may have bought shares in the last year, but they didn't sell any. 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!
Develop Global is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders At Develop Global Have Bought Stock Recently
It's good to see that Develop Global insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought AU$671k worth of shares. This is a positive in our book as it implies some confidence.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Develop Global insiders own 19% of the company, worth about AU$88m. 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 Develop Global Insiders?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Develop Global shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for Develop Global that deserve your attention before buying any shares.
Of course Develop Global 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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