Insiders Could Have Profited By Holding onto Acma Shares Despite 12% Drop
Acma Ltd.'s (SGX:AYV) stock price has dropped 12% in the previous week, but insiders who sold S$3.7m in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of S$0.28 is still lower than the current share price.
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.
The Last 12 Months Of Insider Transactions At Acma
In the last twelve months, the biggest single sale by an insider was when the insider, Yueshan Zhang, sold S$1.6m worth of shares at a price of S$0.41 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (S$0.067). So it may not tell us anything about how insiders feel about the current share price. Notably Yueshan Zhang was also the biggest buyer, having purchased S$1.3m worth of shares.
Happily, we note that in the last year insiders paid S$1.3m for 10.30m shares. On the other hand they divested 13.10m shares, for S$3.7m. All up, insiders sold more shares in Acma than they bought, over the last year. The sellers received a price of around S$0.28, on average. Insider selling doesn't make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of S$0.067. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Acma
I will like Acma better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Does Acma Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Acma insiders own 46% of the company, worth about S$1.6m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Acma Insider Transactions Indicate?
The fact that there have been no Acma insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Acma, we can't say the same about the selling of shares. 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, Acma has 4 warning signs (and 3 which make us uncomfortable) we think you should know about.
But note: Acma 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.