With Farm Pride Foods Up 18%, Insider Buyers Count Their Returns

Last week, Farm Pride Foods Limited (ASX:FRM) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 18% last week, resulting in a AU$4.3m increase in the company's market worth, implying a 29% gain on their initial purchase. As a result, their original purchase of AU$106.1k worth of stock is now worth AU$137.2k.

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.

View our latest analysis for Farm Pride Foods

Farm Pride Foods Insider Transactions Over The Last Year

The Non-Executive Director Malcolm Ward made the biggest insider purchase in the last 12 months. That single transaction was for AU$100k worth of shares at a price of AU$0.10 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.13. 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.

Over the last year, we can see that insiders have bought 1.06m shares worth AU$106k. On the other hand they divested 1.00m shares, for AU$100k. In total, Farm Pride Foods insiders bought more than they sold over the last year. 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).

Does Farm Pride Foods Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Farm Pride Foods insiders own 56% of the company, currently worth about AU$16m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Farm Pride Foods Tell Us?

We can't make any useful conclusions about recent trading, since insider buying and selling has been balanced. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Farm Pride Foods insiders feel good about the company's future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Farm Pride Foods has 5 warning signs (2 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

But note: Farm Pride Foods 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.