Multiple insiders bought Australian Clinical Labs Limited (ASX:ACL) stock earlier this year, a positive sign for shareholders

It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Australian Clinical Labs Limited's (ASX:ACL) 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Australian Clinical Labs

The Last 12 Months Of Insider Transactions At Australian Clinical Labs

The CEO & Executive Director Melinda McGrath made the biggest insider purchase in the last 12 months. That single transaction was for AU$335k worth of shares at a price of AU$5.06 each. That means that even when the share price was higher than AU$3.47 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid AU$511k for 104.53k shares. But insiders sold 52.50k shares worth AU$211k. In total, Australian Clinical Labs insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Australian Clinical Labs is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Australian Clinical Labs Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Australian Clinical Labs. Specifically, insiders ditched AU$211k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

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. Insiders own 4.6% of Australian Clinical Labs shares, worth about AU$32m. 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 Do The Australian Clinical Labs Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So the recent selling doesn't worry us too much. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Australian Clinical Labs. Case in point: We've spotted 3 warning signs for Australian Clinical Labs you should be aware of, and 1 of these shouldn't be ignored.

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.

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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