With Aurum Resources Up 13%, Insider Buyers Count Their Returns

Aurum Resources Limited (ASX:AUE) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 13%, resulting in a AU$6.7m rise in the company's market capitalisation, translating to a gain of 27% on their initial investment. As a result, their original purchase of AU$348.0k worth of stock is now worth AU$442.3k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Aurum Resources

The Last 12 Months Of Insider Transactions At Aurum Resources

Notably, that recent purchase by Caigen Wang is the biggest insider purchase of Aurum Resources shares that we've seen in the last year. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.29. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Aurum Resources insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Aurum 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.

Aurum Resources Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Aurum Resources. Overall, three insiders shelled out AU$338k for shares in the company -- and none sold. This makes one think the business has some good points.

Insider Ownership Of Aurum Resources

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Aurum Resources insiders own about AU$5.6m worth of shares. That equates to 22% 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 Aurum Resources Insider Transactions Indicate?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Aurum Resources shares, given these transactions (along with notable insider ownership of the company). 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. For instance, we've identified 4 warning signs for Aurum Resources (3 don't sit too well with us) you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.