【sushi madre on mcpherson】How Many Insiders Bought Advanced Braking Technology Limited (ASX:ABV) Shares?

It is sushi madre on mcphersonnot uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell

Advanced Braking Technology Limited

(

ASX:ABV

), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University

study

found that ‘insider purchases earn abnormal returns of more than 6% per year.’

View our latest analysis for Advanced Braking Technology

Advanced Braking Technology Insider Transactions Over The Last Year

Keith Knowles made the biggest insider purchase in the last 12 months. That single transaction was for AU$445k worth of shares at a price of AU$0.039 each. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. That purchase may suggest an expectation of positive returns over the long term.

Happily, we note that in the last year insiders bought 15.54m shares for a total of AU$566k. In total, Advanced Braking Technology insiders bought more than they sold over the last year. Their average price was about AU$0.036. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$0.018. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

ASX:ABV Insider Trading January 2nd 19

There are plenty of other companies that have insiders buying up shares. You probably do

not

want to miss this

free

list of growing companies that insiders are buying.

Insiders at Advanced Braking Technology Have Bought Stock Recently

Over the last three months, we’ve seen significant insider buying at Advanced Braking Technology. Not only was there no selling that we can see, but they collectively bought AU$474k worth of shares. That shows some optimism about the company’s future.

Insider Ownership of Advanced Braking Technology

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. Advanced Braking Technology insiders own 34% of the company, currently worth about AU$1.8m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

Story continues

What Might The Insider Transactions At Advanced Braking Technology Tell Us?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don’t feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Advanced Braking Technology we think they are probably pretty confident of a bright future. Along with insider transactions, I recommend checking if Advanced Braking Technology is growing revenue. This free chart of

historic revenue and earnings should make that easy

.

Of course

Advanced Braking Technology may not be the best stock to buy

. So you may wish to see this

free

collection of high quality companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

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