Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Verbrec Limited (ASX:VBC), that sends out a positive message to the company's shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Verbrec

Verbrec Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Development Advisor & Non-Executive Director Brian O'Sullivan bought AU$223k worth of shares at a price of AU$0.079 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.13), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Verbrec insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.07. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership Of Verbrec

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Verbrec insiders own about AU$12m worth of shares. That equates to 30% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Verbrec Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Verbrec insiders are doubting the company, and they do own shares. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 3 warning signs for Verbrec (of which 1 is significant!) you should know about.