At the end of each week I like to look at which shares have experienced meaningful insider buying.
This is because insider buying is often regarded as a bullish indicator as few people know a company and its intrinsic value better than its own directors.
Two shares which have reported meaningful insider buying this week are listed below:
Automotive Holdings Group Ltd (ASX: AHG)
According to a change of director’s interest notice, non-executive director Andrea Hall has bought 10,000 shares in this struggling auto retailer through an on-market trade this week. The director paid an average of approximately $1.59 per share or a total consideration of $15,890. Earlier this week Automotive Holdings Group’s shares were trading at a 52-week low of $1.39. Its shares have come under pressure due to the company’s underperformance caused by headwinds across the automotive sector from the decline in the new vehicle market and the regulatory intervention in the sale of finance and insurance products. Interestingly, Hall is the third insider to buy shares this month. While its shares do look cheap, I would suggest investors wait for signs that trading conditions are improving before picking up shares in Automotive Holdings Group or rival AP Eagers Ltd (ASX: APE).
Pendal Group Ltd (ASX: PDL)
A change of director’s interest notice reveals that non-executive director Andrew Fay has picked up a total of 15,000 shares of this fund manager at a price of $7.85 per share through an on-market trade this week. This equates to a total consideration of $117,750. Mr Fay appears to have seen value in its shares at that level after a 30% decline in 2018. While I do like Pendal Group, I intend to wait and see how the Brexit impacts its UK-based business in 2019. At its annual general meeting today the company advised that it is preparing for a no-deal Brexit.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Automotive Holdings Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.