Insider Buyers Lose AU$258k As Rectifier Technologies Sheds AU$1.4m

The recent 10.0% drop in Rectifier Technologies Ltd's (ASX:RFT) stock could come as a blow to insiders who purchased AU$547.4k worth of stock at an average buy price of AU$0.017 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$289.8k, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Rectifier Technologies

The Last 12 Months Of Insider Transactions At Rectifier Technologies

In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Zong Wang bought AU$527k worth of shares at a price of AU$0.017 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.009). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Zong Wang was the only individual insider to buy during the last year.

Zong Wang purchased 32.20m shares over the year. The average price per share was AU$0.017. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Rectifier Technologies insiders own 62% of the company, currently worth about AU$7.7m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Rectifier Technologies Insider Transactions Indicate?

The fact that there have been no Rectifier Technologies insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Rectifier Technologies insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rectifier Technologies. Be aware that Rectifier Technologies is showing 3 warning signs in our investment analysis, and 2 of those are significant...

Of course Rectifier Technologies 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 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.