It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Renascor Resources Limited (ASX:RNU).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Renascor Resources
Over the last year, we can see that the biggest insider purchase was by David Clarke for AU$3.1m worth of shares, at about AU$0.018 per share. That means that an insider was happy to buy shares at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then. Notably David Clarke was also the biggest seller, having sold AU$355k worth of shares.
In the last twelve months insiders purchased 175.31m shares for AU$3.2m. But they sold 21.02m for AU$355k. Overall, Renascor Resources insiders were net buyers last year. They paid about AU$0.018 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (AU$0.018). You can see a visual depiction of insider transactions (by 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Renascor Resources Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Renascor Resources shares over the last three months. In that time, David Clarke dumped AU$355k worth of shares. On the other hand we note insiders bought AU$25k worth of shares. Generally this level of net selling might be considered a bit bearish.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Renascor Resources insiders own about AU$6.4m worth of shares. That equates to 31% 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 Does This Data Suggest About Renascor Resources Insiders?
The stark truth for Renascor Resources is that there has been more insider selling than insider buying in the last three months. On the other hand, the insider transactions over the last year are encouraging. It’s good to see insiders are shareholders. So we’re happy enough to look past some selling. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Renascor Resources 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.