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 Essentra plc (LON:ESNT), that sends out a positive message to the company’s shareholders.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Our free stock report includes 2 warning signs investors should be aware of before investing in Essentra. Read for free now.

The Independent Non-Executive Chairman Steve Good made the biggest insider purchase in the last 12 months. That single transaction was for UK£38k worth of shares at a price of UK£1.09 each. That means that an insider was happy to buy shares at above the current price of UK£0.92. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

While Essentra insiders bought shares during the last year, they didn’t sell. They paid about UK£1.25 on average. I’d consider this a positive as it suggests insiders see value at around the current price. 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!

See our latest analysis for Essentra

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

It’s good to see that Essentra insiders have made notable investments in the company’s shares. Independent Non-Executive Chairman Steve Good spent UK£38k on stock, and there wasn’t any selling. That shows some optimism about the company’s future.

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. From what we can see in our data, insiders own only about UK£260k worth of Essentra shares. We might be missing something but that seems like very low insider ownership.