It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in BWX Limited's (ASX:BWX) case, it's fantastic news for shareholders.

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.

Check out our latest analysis for BWX

BWX Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Ian Campbell for AU$102k worth of shares, at about AU$2.17 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.23). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months BWX insiders were buying shares, but not selling. The average buy price was around AU$1.69. These transactions suggest that insiders have considered the current price attractive. 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! insider-trading-volume

BWX is not the only stock insiders are buying. So take a peek at this freelist of growing companies with insider buying.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests BWX insiders own 2.6% of the company, worth about AU$1.2m. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.



So What Does This Data Suggest About BWX Insiders?

The fact that there have been no BWX insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if BWX insiders bought more shares in the company. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 3 warning signs for BWX (1 shouldn't be ignored!) that we believe deserve your full attention.

But note: BWX may not be the best stock to buy. So take a peek at this freelist 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.

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.

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