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 recently. Here are a couple which have caught my eye:
ELMO Software Ltd (ASX: ELO)
According to a change of director’s interest notice, one of this cloud-based human resources and payroll platform provider’s directors has been buying shares this month.
The notice reveals that Independent Non-Executive Director, Kate Hill, bought a total of 9,870 shares via an on-market trade on 1 April. Ms Hill paid $49,945.76 for the shares, which equates to an average of $5.06 per share.
With the ELMO share price down by over a third from its 52-week high, it appears as though this director sees value in the company’s shares at this level.
One broker that might agree is Morgan Stanley. Its analysts currently have an overweight rating and $9.70 price target on ELMO’s shares.
Nextdc Ltd (ASX: NXT)
Another change of director’s interest notice reveals that one of this data centre operator’s directors has taken advantage of the recent weakness in its share price to add to her position.
According to the notice, the company’s Non-Executive Director, Jennifer Lambert, snapped up 6,154 shares through an on-market trade on 7 April. Ms Lambert paid an average of $11.35 per share for the parcel, which equates to a total consideration of ~$69,500.
As with ELMO, the NextDC share price is trading a long way from its 52-week high of $14.10 at present.
Though, one leading broker believes it will not only get back there, but go even higher. This week Goldman Sachs reiterated its buy rating, added NextDC to its conviction list, and increased its price target to $15.00.
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More reading
- ASX 200 down 0.4%: Tech shares rise, Afterpay increases US stake
- 4 fantastic ASX shares with exposure to the cloud computing boom
- Top brokers name 3 ASX shares to buy today
- Why EML, NextDC, Qantas, & Recce shares are racing higher
- Here’s why the NextDC (ASX:NXT) share price is racing higher
James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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