A lot of investors like to follow company director buying or selling of shares to get a handle on what companies may be under or over-valued.
After all company directors should have a better idea than anyone whether a business is performing well and likely to keep doing so over the next 12 months.
Director selling can be for many reasons for example to pay tax bills, settle a divorce, buy a huge house, or just to take some chips off the table.
But no one buys shares in a company if they think the share price is about to fall.
And no one should have a better idea than how an IT hardware distribution business is travelling than its own COO who has been with the company for over 5 years.
On August 29 the Dicker Data Ltd (ASX: DDR) COO, Vladimir Mitnovetski, bought another 20,000 shares on market at $6.90 a share to take his total holding to nearly 673,000 shares.
This is notable because we can see the COO already had a substantial part of his net worth tied up in the business, so if he’s investing more of his own cash it suggests he thinks the shares are going higher in time.
Dicker Data shares are still heavily owned by other insiders some of whom have also added to their holdings in recent years.
The company just grew its half-year net profit after tax 50.5% to $23.8 million and looks likely to smash its full year guidance.
It’s also investing heavily in a huge new distribution centre in Sydney to support its long-term growth ambitions.
As such it’s possible to see why the COO feels the shares will go higher.
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The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Dicker Data Limited. The Motley Fool Australia owns shares of WiseTech Global. 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.