Alara Resources Slides As Insider Purchases Lose Another AU$61k

The recent price decline of 15% in Alara Resources Limited's (ASX:AUQ) stock may have disappointed insiders who bought AU$567.3k worth of shares at an average price of AU$0.037 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$506.8k, which is not what they expected.

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.

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The Last 12 Months Of Insider Transactions At Alara Resources

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Vikas Jain for AU$300k worth of shares, at about AU$0.04 per share. That means that even when the share price was higher than AU$0.033 (the recent price), an insider wanted to purchase shares. 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. To us, it's very important to consider the price insiders pay for shares. 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 Alara Resources insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Alara Resources

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.

Alara Resources Insiders Bought Stock Recently

Over the last quarter, Alara Resources insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought AU$567k worth of shares. That shows some optimism about the company's future.

Insider Ownership Of Alara Resources

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Alara Resources insiders own about AU$9.6m worth of shares. That equates to 36% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Alara Resources Tell Us?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Alara Resources shares, given these transactions (along with notable insider ownership of the company). 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. At Simply Wall St, we've found that Alara Resources has 3 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.

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.

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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.