When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in IDP Education Limited’s (ASX:IEL) instance, it’s good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Paul Rogan bought AU$253k worth of shares at a price of AU$5.63 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$6.33. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
In the last twelve months IDP Education insiders were buying shares, but not selling. Their average price was about AU$5.02. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today’s share price. 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!
View our latest analysis for IDP Education
IDP Education is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
It’s good to see that IDP Education 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$422k worth of shares. That shows some optimism about the company’s future.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests IDP Education insiders own 0.2% of the company, worth about AU$3.2m. I generally like to see higher levels of ownership.
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that IDP Education insiders are expecting a bright 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. For example – IDP Education has 1 warning sign we think you should be aware of.