Insiders Who Sold Fortifai Made The Right Call As Market Cap Slides By AU$67m
Over the past year, insiders sold AU$98k worth of Fortifai Limited (ASX:FTI) stock at an average price of AU$0.20 per share allowing them to get the most out of their money. The company's market valuation decreased by AU$67m after the stock price dropped 20% over the past week, but insiders were spared from painful losses.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Fortifai Insider Transactions Over The Last Year
The insider, Duncan Gordon, made the biggest insider sale in the last 12 months. That single transaction was for AU$98k worth of shares at a price of AU$0.20 each. That means that an insider was selling shares at slightly below the current price (AU$0.79). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 50% of Duncan Gordon's holding. Duncan Gordon was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Fortifai
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insider Ownership Of Fortifai
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 21% of Fortifai shares, worth about AU$58m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Fortifai Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Fortifai insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for Fortifai (2 are a bit concerning!) and we strongly recommend you look at these before investing.
Of course Fortifai may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.