This usually happens without incident when a single insider buys shares. However, when a number of insiders buy shares, as happened in Bytes Technology Group plc (LON:BYIT), this is fantastic news for shareholders.
While we would never suggest that investors base their decisions solely on what a company’s management does, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Bytes Technology Group
Over the last year we can see that the biggest insider purchase was made by Anna Persson, an independent non-executive director, worth UK£50,000 worth of shares, at around UK£5.49 per share. So it’s clear that an insider wanted to buy, even at a higher price than the current share price (i.e. UK£4.32). While their views may have changed since the purchase, it at least suggests they have had confidence in the company’s future. In our opinion, the price an insider pays for shares is very important. Generally, we are more bullish on a stock if insiders have been buying shares above the current price, because that suggests they view the stock as a good value, even at a higher price.
Over the last twelve months, Bytes Technology Group insiders were buying shares, but not selling. Below you can see a visual representation of insider transactions (by companies and individuals) over the last 12 months. If you want to know exactly who sold, for how much and when, just click on the graph below!
There are still plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you can take a look at this free list of companies. (Hint: insiders buy them).
Another way to test the alignment between a company’s leaders and other shareholders is to look at the number of shares they own. Strong insider ownership often makes company management more concerned with shareholder interests. Insiders own 0.4% of Bytes Technology Group shares, worth about UK£4.4m, according to our data. But they might have an indirect interest through a corporate structure that we are not aware of. Although it’s better than nothing, these titles don’t impress us too much.
The fact that there haven’t been any insider transactions at Bytes Technology Group recently certainly doesn’t bother us. But insiders have shown greater appetite for the stock over the past year. While we’re not worried about insider transactions, we would be more comfortable if they owned more shares of Bytes Technology Group. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know what risks a particular company is facing. Every business has risks, and we have spotted 1 warning sign for Bytes Technology Group you should know that.