Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Rafaella Resources Limited (ASX:RFR), it sends a favourable 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 do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Rafaella Resources
Over the last year, we can see that the biggest insider purchase was by insider Kenneth Hall for AU$435k worth of shares, at about AU$0.073 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.043). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. 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.
Rafaella Resources insiders may have bought shares in the last year, but they didn't sell any. 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!
Rafaella Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Rafaella Resources Insiders Bought Stock Recently
We saw some Rafaella Resources insider buying shares in the last three months. Non-Independent Non-Executive Director Robert Wrixon shelled out AU$35k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Insider Ownership of Rafaella Resources
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 Rafaella Resources insiders own 19% of the company, worth about AU$1.8m. 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 Does This Data Suggest About Rafaella Resources Insiders?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. However, our analysis of transactions over the last year is heartening. Insiders own shares in Rafaella Resources and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rafaella Resources. Every company has risks, and we've spotted 5 warning signs for Rafaella Resources (of which 3 make us uncomfortable!) you should know about.
But note: Rafaella Resources 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.
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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.