Positive Signs As Multiple Insiders Buy Recce Pharmaceuticals Stock

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 Recce Pharmaceuticals Ltd (ASX:RCE), 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.

View our latest analysis for Recce Pharmaceuticals

Recce Pharmaceuticals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chief Scientific Director & Executive Director, Michele Diliza, for AU$335k worth of shares, at about AU$0.40 per share. That means that an insider was selling shares at slightly below the current price (AU$0.51). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 24% of Michele Diliza's holding. The only individual insider seller over the last year was Michele Diliza.

Over the last year, we can see that insiders have bought 990.51k shares worth AU$524k. But they sold 836.41k shares for AU$335k. In total, Recce Pharmaceuticals insiders bought more than they sold over the last year. They paid about AU$0.53 on average. These transactions suggest that insiders have considered the current price attractive. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Recce Pharmaceuticals 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.

Does Recce Pharmaceuticals Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Recce Pharmaceuticals insiders own about AU$31m worth of shares. That equates to 30% of the company. 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 Do The Recce Pharmaceuticals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Recce Pharmaceuticals shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Recce Pharmaceuticals and we see no evidence to suggest they are worried about the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 6 warning signs for Recce Pharmaceuticals you should be aware of, and 2 of them can't be ignored.

But note: Recce Pharmaceuticals 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 of direct interests only, but not derivative transactions or indirect interests.

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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.