African Gold Insiders May Regret Not Buying More, Market Cap Hits AU$7.9m

African Gold Limited (ASX:A1G) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 21%, resulting in a AU$1.4m rise in the company's market capitalisation, translating to a gain of 45% on their initial investment. As a result, the stock they originally bought for AU$208.1k is now worth AU$301.8k.

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 African Gold

The Last 12 Months Of Insider Transactions At African Gold

The Non-Executive Director Tolga Kumova made the biggest insider purchase in the last 12 months. That single transaction was for AU$183k worth of shares at a price of AU$0.02 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.029. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

African Gold insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and 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!

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).

African Gold Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at African Gold. Not only was there no selling that we can see, but they collectively bought AU$208k worth of shares. This makes one think the business has some good points.

Does African Gold 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that African Gold insiders own 37% of the company, worth about AU$3.0m. 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 Do The African Gold Insider Transactions Indicate?

The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of African Gold we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing African Gold. You'd be interested to know, that we found 5 warning signs for African Gold and we suggest you have a look.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.