Even if it’s not a huge purchase, we think it was good to see that David Schwartz, the Non-Executive Independent Director of Schaffer Corporation Limited (ASX:SFC) recently shelled out AU$98k to buy stock, at AU$19.50 per share. Nevertheless, it only increased their shareholding by a minuscule percentage, and it wasn’t a massive purchase by absolute value, either.
Notably, that recent purchase by Non-Executive Independent Director David Schwartz was not the only time they bought Schaffer shares this year. Earlier in the year, they paid AU$20.60 per share in a AU$103k purchase. That means that an insider was happy to buy shares at above the current price of AU$20.01. 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. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. David Schwartz was the only individual insider to buy during the last year.
David Schwartz bought a total of 13.00k shares over the year at an average price of AU$20.29. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
View our latest analysis for Schaffer
Schaffer is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Schaffer insiders own 46% of the company, currently worth about AU$125m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Schaffer. Nice! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Our analysis shows 2 warning signs for Schaffer (1 doesn’t sit too well with us!) and we strongly recommend you look at them before investing.