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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Reward Minerals Ltd's (ASX:RWD) instance, it's good news for 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 Reward Minerals
In the last twelve months, the biggest single purchase by an insider was when Executive Director Michael Ruane bought AU$434k worth of shares at a price of AU$0.14 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.14). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. We note that Michael Ruane was both the biggest buyer and the biggest seller.
Happily, we note that in the last year insiders paid AU$740k for 18.93m shares. But insiders sold 3.06m shares worth AU$430k. Overall, Reward Minerals insiders were net buyers during the last year. They paid about AU$0.039 on average. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!
Reward Minerals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Reward Minerals Have Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Reward Minerals. Executive Director Michael Ruane bought AU$52k worth of shares in that time. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.
Insider Ownership of Reward Minerals
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 Reward Minerals insiders own 32% of the company, worth about AU$8.8m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Reward Minerals Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Reward Minerals insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 5 warning signs for Reward Minerals (2 don't sit too well with us!) and we strongly recommend you look at these before investing.
Of course Reward Minerals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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.
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