Should You Take Comfort From Insider Transactions At Candy Club Holdings Limited (ASX:CLB)?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Candy Club Holdings Limited (ASX:CLB), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Candy Club Holdings

The Last 12 Months Of Insider Transactions At Candy Club Holdings

In the last twelve months, the biggest single purchase by an insider was when Chairman James Baillieu bought AU$3.3m worth of shares at a price of AU$0.08 per share. That means that even when the share price was higher than AU$0.06 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months insiders purchased 51.64m shares for AU$3.5m. On the other hand they divested 725208 shares, for AU$59k. In the last twelve months there was more buying than selling by Candy Club Holdings insiders. The average buy price was around AU$0.068. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by 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!

Candy Club Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Candy Club Holdings Have Bought Stock Recently

Over the last quarter, Candy Club Holdings insiders have spent a meaningful amount on shares. Chairman James Baillieu spent AU$3.3m on stock, and there wasn't any selling. This makes one think the business has some good points.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Candy Club Holdings insiders own 44% of the company, currently worth about AU$6.0m 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.

What Might The Insider Transactions At Candy Club Holdings Tell Us?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Candy Club Holdings insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! Along with insider transactions, I recommend checking if Candy Club Holdings is growing revenue. This free chart of historic revenue and earnings should make that easy.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.