Great news for Orbital Corporation Limited (ASX:OEC): Insiders acquired stock in large numbers last year
Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Orbital Corporation Limited (ASX:OEC), that sends out a positive message to the company's 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.
See our latest analysis for Orbital
Orbital Insider Transactions Over The Last Year
Notably, that recent purchase by John Welborn is the biggest insider purchase of Orbital shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is AU$0.20. 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.
Orbital 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Orbital is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders At Orbital Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Orbital. Overall, three insiders shelled out AU$220k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Does Orbital Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that Orbital insiders own 5.2% of the company, worth about AU$1.2m. However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Orbital Insiders?
It's certainly positive to see the recent insider purchases. 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. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Orbital insiders are reasonably well aligned, and optimistic for the future. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Orbital has 5 warning signs (and 2 which don't sit too well with us) we think you should know about.
But note: Orbital 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.
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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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