Zimi Insider Purchases Yet To Pay Off Regardless Of Recent Strength

Insiders who purchased AU$699.1k worth of Zimi Limited (ASX:ZMM) shares over the past year recouped some of their losses after price gained 33% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$182k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Zimi

In fact, the recent purchase by Non-Executive Director Simon Gerard was not their only acquisition of Zimi shares this year. Earlier in the year, they paid AU$0.006 per share in a AU$366k purchase. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.004). 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. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Over the last year, we can see that insiders have bought 129.26m shares worth AU$699k. But insiders sold 19.60m shares worth AU$59k. In total, Zimi insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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 Zimi

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insiders At Zimi Have Bought Stock Recently

At Zimi,over the last quarter, we have observed quite a lot more insider buying than insider selling. Non-Executive Director Simon Gerard spent AU$153k on stock. On the other hand, insider Craig Chapman netted AU$59k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership Of Zimi

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. We usually like to see fairly high levels of insider ownership. Zimi insiders own about AU$1.4m worth of shares. That equates to 37% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Zimi Tell Us?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of Zimi we think they are probably pretty confident of a bright future. 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 Zimi (2 are significant!) and we strongly recommend you look at them before investing.

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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.

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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.