As Ariadne Australia Limited's (ASX:ARA) market cap increased AU$16m, insiders who bought last year may be reflecting on buying more

By
Simply Wall St
Published
August 26, 2021
ASX:ARA
Source: Shutterstock

Last week, Ariadne Australia Limited (ASX:ARA) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 15% last week, resulting in a AU$16m increase in the company's market worth. As a result, the stock they originally bought for AU$196k is now worth AU$236k.

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 Ariadne Australia

The Last 12 Months Of Insider Transactions At Ariadne Australia

The Alternate Director Benjamin Seymour made the biggest insider purchase in the last 12 months. That single transaction was for AU$97k worth of shares at a price of AU$0.53 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.61. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Benjamin Seymour purchased 386.69k shares over the year. The average price per share was AU$0.51. 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!

insider-trading-volume
ASX:ARA Insider Trading Volume August 26th 2021

Ariadne Australia 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 Ariadne Australia 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Ariadne Australia insiders own 60% of the company, currently worth about AU$72m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Ariadne Australia Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Ariadne Australia insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Ariadne Australia is showing 2 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

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