Investors who take an interest in Indigo Books & Music Inc. (TSE:IDG) should definitely note that the Founder, Heather Reisman, recently paid CA$4.06 per share to buy CA$446k worth of the stock. That's a very solid buy in our book, and increased their holding by a noteworthy 17%.

See our latest analysis for Indigo Books & Music

The Last 12 Months Of Insider Transactions At Indigo Books & Music

Notably, that recent purchase by Founder Heather Reisman was not the only time they bought Indigo Books & Music shares this year. They previously made an even bigger purchase of CA$988k worth of shares at a price of CA$2.50 per share. Even though the purchase was made at a significantly lower price than the recent price (CA$4.05), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Indigo Books & Music insiders bought shares during the last year, they didn't sell. The average buy price was around CA$2.24. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Indigo Books & Music

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Indigo Books & Music insiders own about CA$34m worth of shares. That equates to 31% 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.

So What Do The Indigo Books & Music Insider Transactions Indicate?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Indigo Books & Music shares, given these transactions (along with notable insider ownership of the company). 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 2 warning signs for Indigo Books & Music (1 can't be ignored!) and we strongly recommend you look at them before investing.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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. 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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