Pleasing Signs As A Number Of Insiders Buy Brimstone Investment Stock
When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Brimstone Investment Corporation Limited's (JSE:BRT) instance, it's good news for 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.
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Over the last year, we can see that the biggest insider purchase was by Executive Chairman Frederick Robertson for R1.0m worth of shares, at about R4.32 per share. That means that an insider was happy to buy shares at above the current price of R4.10. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.
In the last twelve months Brimstone Investment insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Check out our latest analysis for Brimstone Investment
Brimstone Investment is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
It's good to see that Brimstone Investment insiders have made notable investments in the company's shares. Overall, two insiders shelled out R1.1m for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It appears that Brimstone Investment insiders own 29% of the company, worth about R288m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Brimstone Investment. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Brimstone Investment. Every company has risks, and we've spotted 3 warning signs for Brimstone Investment (of which 2 are concerning!) you should know about.
But note: Brimstone Investment 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 of direct interests only, but not derivative transactions or indirect interests.
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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