Often it can be worthwhile following the insider trades of senior management at companies they run.
This is because most management members at listed businesses should have a sound understanding of share markets, valuations, and the outlook for the businesses they run.
While director selling can be for many reasons and is normally hard to draw definitive conclusions from, if a director buys shares in a business 'on-market' it's normally a postivie sign.
After all, nobody buys shares in a business if they expect them to go down over say the next 6-12 month period.
On September 13 Webjet Limited (ASX: WEB) director Brad Holman bought 8,000 shares in the business with the shares closing at $12.02 that day.
Mr. Holman already held 55,120 shares in the business and when a director adds to pre-existing holdings it's another good sign.
While 8,000 shares worth around $96,000 isn't a huge amount it's significant enough to suggest Mr Holman has some conviction he'll eventually make a profit on the trade.
According to Webjet's website Mr Holman "has over 20 years' experience working in and providing services to the travel industry" and has worked in senior roles at Webjet since 2014. As such he should have an excellent idea of how the business is tracking.
This afternoon the stock is changing hands for just $11.61 and given the strong growth of its B2B hotels booking business I reckon it could be cheap.
Webjet also has a strong balance sheet, excellent track record and management team with interests well aligned to shareholders.
Sentiment around the business is weak right now though due to the problems its partner Thomas Cook (as the UK's largest travel agent) is facing in the Brexit hit UK.
A lot of holidaymakers in the UK have put off overseas travel plans until "Brexit" is 'resolved' and Pound sterling gains strength. The problem is the 'resolution" to Brexit keeps getting unexpectedly pushed out. This is hurting confidence and travel businesses.
However, buying good quality businesses like Webjet when sentiment is weak can often be a sound investing strategy.
Other companies that have seen some strong insider buying recently include Corporate Travel Management Ltd (ASX: CTD) and the L1 Long Short Fund Ltd (ASX: LSF).
