Multiple insiders bought Ardent Leisure Group Limited (ASX:ALG) stock earlier this year, a positive sign for shareholders




  • In Business
  • 2021-10-14 20:29:12Z
  • By Simply Wall St.
 

Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Ardent Leisure Group Limited (ASX:ALG), it sends a favourable message to the company's shareholders.

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.

See our latest analysis for Ardent Leisure Group

The Last 12 Months Of Insider Transactions At Ardent Leisure Group

The Non-Executive Chairman Gary Weiss made the biggest insider purchase in the last 12 months. That single transaction was for AU$315k worth of shares at a price of AU$0.63 each. We do like to see buying, but this purchase was made at well below the current price of AU$1.52. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Ardent Leisure Group insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.70. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Ardent Leisure Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Ardent Leisure Group Insiders Bought Stock Recently

We saw some Ardent Leisure Group insider buying shares in the last three months. Independent Director Randy Garfield bought AU$39k worth of shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. However, in this case the amount invested recently is quite small.

Insider Ownership

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. Ardent Leisure Group insiders own about AU$42m worth of shares. That equates to 5.7% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Ardent Leisure Group Insiders?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Ardent Leisure Group insiders are doubting the company, and they do own 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. At Simply Wall St, we found 1 warning sign for Ardent Leisure Group that deserve your attention before buying any shares.

But note: Ardent Leisure Group 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, but not derivative transactions.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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