ARC Funds Insider Confidence Rewarded, Stock Hits AU$4.5m Market Cap

ARC Funds Limited (ASX:ARC) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 31%, resulting in a AU$1.1m rise in the company's market capitalisation, translating to a gain of 30% on their initial investment. As a result, the stock they originally bought for AU$294.1k is now worth AU$383.2k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for ARC Funds

The Last 12 Months Of Insider Transactions At ARC Funds

In fact, the recent purchase by Harley Grosser was the biggest purchase of ARC Funds shares made by an insider individual in the last twelve months, according to our records. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.12. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months ARC Funds insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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).

ARC Funds Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at ARC Funds. Non-Executive Director Harley Grosser spent AU$284k on stock, and there wasn't any selling. This makes one think the business has some good points.

Insider Ownership Of ARC Funds

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 33% of ARC Funds shares, worth about AU$1.5m. 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 ARC Funds Insider Transactions Indicate?

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 ARC Funds insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ARC Funds. Case in point: We've spotted 4 warning signs for ARC Funds you should be aware of, and 3 of them are concerning.

But note: ARC Funds 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.