Insiders Rewarded With US$157k Addition To Investment As FAR Stock Hits AU$48m

FAR Limited (ASX:FAR) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 13% resulting in a AU$5.5m addition to the company’s market value. As a result, their original purchase of US$791.5k worth of stock is now worth US$948.2k.

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.

See our latest analysis for FAR

The Last 12 Months Of Insider Transactions At FAR

In fact, the recent purchase by insider Joseph Oyaski was not their only acquisition of FAR shares this year. They previously made an even bigger purchase of AU$371k worth of shares at a price of AU$0.41 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.52. 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.

Happily, we note that in the last year insiders paid AU$792k for 1.84m shares. But insiders sold 172.92k shares worth AU$81k. In the last twelve months there was more buying than selling by FAR insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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).

Insiders At FAR Have Bought Stock Recently

There has been significantly more insider buying, than selling, at FAR, over the last three months. In total, two insiders bought AU$421k worth of shares in that time. On the other hand, insider Joseph Oyaski netted AU$81k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Does FAR 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. From our data, it seems that FAR insiders own 11% of the company, worth about AU$5.0m. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About FAR Insiders?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on FAR stock. 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 example, FAR has 3 warning signs (and 2 which are significant) we think you should know about.

Of course FAR 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com