Last week, Nortel AS insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 11 per cent last week, resulting in a Kr41m(US$3.92million) increase in the company’s market worth. Put another way, the original kr2.0m acquisition is now worth kr2.4m.

Although we don’t think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

The Last 12 Months Of Insider Transactions At Nortel

The Founder Christian Pritchard made the biggest insider purchase in the last 12 months. That single transaction was for kr1m worth of shares at a price of kr18.00 each. We do like to see buying, but this purchase was made at well below the current price of kr22.20. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.

While Nortel insiders bought shares during the last year, they didn’t sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It appears that Nortel insiders own 33 per cent of the company, worth about kr138m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Nortel Insiders?

The fact that there have been no Nortel insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Nortel insiders think the business has merit. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Nortel. Every company has risks, and we’ve spotted 2 warning signs for Nortel you should know about.

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

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

Valuation is complex, but we’re helping make it simple.

Find out whether Nortel is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.