Insiders of Rhythm Biosciences Limited (ASX:RHY) received good value on their investment after their AU$678k purchase jumped AU$495k in value

By
Simply Wall St
Published
March 22, 2022
ASX:RHY
Source: Shutterstock

Rhythm Biosciences Limited (ASX:RHY) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 17%, resulting in a AU$45m rise in the company's market capitalisation. Put another way, the original AU$678k acquisition is now worth AU$1.2m.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Rhythm Biosciences

Rhythm Biosciences Insider Transactions Over The Last Year

The Executive Chairman Otto Buttula made the biggest insider purchase in the last 12 months. That single transaction was for AU$582k worth of shares at a price of AU$0.85 each. We do like to see buying, but this purchase was made at well below the current price of AU$1.47. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months Rhythm Biosciences insiders were buying shares, but not selling. 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!

insider-trading-volume
ASX:RHY Insider Trading Volume March 22nd 2022

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

Does Rhythm Biosciences 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. It's great to see that Rhythm Biosciences insiders own 43% of the company, worth about AU$135m. 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 Rhythm Biosciences Insider Transactions Indicate?

The fact that there have been no Rhythm Biosciences insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Rhythm Biosciences insiders think the business has merit. 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. To that end, you should learn about the 4 warning signs we've spotted with Rhythm Biosciences (including 1 which shouldn't be ignored).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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