Insider Purchases Worth AU$46m See Losses As Australian Agricultural Market Value Drops To AU$784m

The recent price decline of 11% in Australian Agricultural Company Limited's (ASX:AAC) stock may have disappointed insiders who bought AU$46m worth of shares at an average price of AU$1.87 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$32m which is not ideal.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Australian Agricultural

Australian Agricultural Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Bryan Glinton bought AU$23m worth of shares at a price of AU$1.91 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$1.30). 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months Australian Agricultural insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Australian Agricultural is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders At Australian Agricultural Have Bought Stock Recently

We saw some Australian Agricultural insider buying shares in the last three months. Independent Non-Executive Director Marc Blazer bought AU$30k worth of shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Australian Agricultural insiders own 71% of the company, currently worth about AU$555m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Australian Agricultural Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, Australian Agricultural insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Australian Agricultural and understanding them should be part of your investment process.

But note: Australian Agricultural 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, but not derivative transactions.

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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.