Johan Fredrick Schering Wachtmeister is the independent director of ALM Equity AB (publ) (STO:ALM) and has just spent 1.4 million kr on shares

Potential ALM Equity AB (publ) (STO: ALM) Shareholders may wish to note that the independent director, Johan Fredrick Schering Wachtmeister, recently purchased 1.4 million kr worth of shares, paying 690 kr for each share. However, it only increased shareholding by a small percentage, and it wasn’t a huge buy in absolute terms either.

Check out our latest ALM Equity analysis

The last 12 months of insider trading at ALM Equity

Notably, this recent purchase by independent director Johan Fredrick Schering Wachtmeister wasn’t the only time they bought ALM Equity shares this year. Earlier in the year, they paid 808 kr per share in a purchase of 11 million kr. This means that even when the share price was above 688 kr (the recent price), an insider wanted to buy shares. Although their perspective has changed since the purchase, it at least suggests they have confidence in the company’s future. In our view, the price an insider pays for the stock is very important. Generally speaking, it comes to our attention when insiders have bought stocks at higher prices than they are now, as it suggests that they thought the stock was worth buying, even at a higher price. Notably Johan Fredrick Schering Wachtmeister was also the biggest seller.

Fortunately, we note that last year insiders paid 14 million kr for 20,830 shares. But they sold 13.53k shares for 11 million kr. Overall, ALM Equity insiders have been net buyers over the past year. Their average price was around 657 kr. These trades show that insiders have the confidence to invest their own money in the stock, albeit at a price slightly lower than the recent price. The chart below shows insider trading (by companies and individuals) over the past year. If you want to know exactly who sold, how much and when, just click on the chart below!

ALM Equity isn’t the only stock insiders are buying. So take a look at this free list of growing companies with insider buying.

Insider ownership

I like to look at how many shares insiders own in a company, to help me get a sense of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. ALM Equity insiders own 68% of the company, which is currently worth around 4.9 billion kr based on the recent share price. This type of significant insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.

So what do insider trading in ALM stocks indicate?

The recent insider buying is encouraging. We also rely on the longer-term picture of insider trading. When combined with notable insider ownership, these factors suggest that ALM Equity insiders are well aligned and most likely believe the stock price is too low. Sounds promising! So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. Be aware that ALM Equity displays 5 warning signs in our investment analysisand 3 of them make us uncomfortable…

But note: ALM Equity may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.