Australian Dairy Nutritionals Reaches AU$56m Market Cap Benefiting Insider Stock Buying

Australian Dairy Nutritionals Limited (ASX:AHF) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 27%, resulting in a AU$12m rise in the company's market capitalisation, translating to a gain of 237% on their initial investment. As a result, their original purchase of AU$170.2k worth of stock is now worth AU$572.8k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Australian Dairy Nutritionals

The Last 12 Months Of Insider Transactions At Australian Dairy Nutritionals

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Peter Nathan for AU$81k worth of shares, at about AU$0.019 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.076. 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.

Peter Nathan purchased 7.54m shares over the year. The average price per share was AU$0.023. 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 plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Does Australian Dairy Nutritionals Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. Australian Dairy Nutritionals insiders own about AU$18m worth of shares. That equates to 32% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Australian Dairy Nutritionals Insiders?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Australian Dairy Nutritionals 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 Australian Dairy Nutritionals. To help with this, we've discovered 5 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Australian Dairy Nutritionals.

But note: Australian Dairy Nutritionals 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.