Every so often, I like to take a look to see 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.
A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:
Fortescue Metals Group Limited (ASX: FMG)
A change of director's interest notice reveals that one of this iron ore producer's non-executive directors has been buying shares recently. According to the notice, Ya-Qin Zhang picked up 12,000 shares through an on-market trade on 27 August. The director paid a total of $230,040 for the shares, which equates to an average of $19.17 per share.
This was just a fraction short of its record high of $19.56, which appears to indicate that the director is confident in Fortescue's future and sees value in its shares at the current level. And with the spot iron ore price currently fetching ~US$126 a tonne, I would have to agree. Fortescue looks likely to generate bumper free cash flows again in FY 2021. This could mean more generous dividends for shareholders. As a result, I think this could make it a great option for income investors.
Inghams Group Ltd (ASX: ING)
This poultry producer has experienced a large amount of insider buying this month. According to a series of notices, no less than five of the company's directors have been increasing their holdings through on-market trades. The two largest purchases came from non-executive director Michael Ihlein and chairman Peter Bush.
Mr Ihlein picked up 45,455 shares on 1 September for an average of $3.29 and Mr Bush paid an average of $3.21 for 50,000 shares a day later. This represents total considerations of $149,546.95 and $160,500, respectively. Judging by these purchases, it would appear as though Inghams' directors believe the worst is over for the company after a difficult 12 months.
