It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Nick Scali Limited's (ASX:NCK) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Nick Scali Insider Transactions Over The Last Year
The Independent Non-Executive Chairman John Ingram made the biggest insider purchase in the last 12 months. That single transaction was for AU$231k worth of shares at a price of AU$9.42 each. That means that even when the share price was higher than AU$8.93 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for 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.
While Nick Scali insiders bought shares during the last year, they didn't sell. 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!
Nick Scali is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Nick Scali Insiders Bought Stock Recently
Over the last quarter, Nick Scali insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought AU$367k worth of shares. This could be interpreted as suggesting a positive outlook.
Does Nick Scali Boast High Insider Ownership?
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. We usually like to see fairly high levels of insider ownership. Based on our data, Nick Scali insiders have about 0.5% of the stock, worth approximately AU$3.8m. However, it's possible that insiders might have an indirect interest through a more complex structure. I generally like to see higher levels of ownership.
So What Does This Data Suggest About Nick Scali Insiders?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Nick Scali insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Nick Scali.
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.
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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.