Are Insiders Buying Danakali Limited (ASX:DNK) Stock?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Danakali Limited (ASX:DNK).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Danakali

The Last 12 Months Of Insider Transactions At Danakali

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Seamus Cornelius for AU$1.7m worth of shares, at about AU$0.42 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$0.52. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Danakali share holders is that insiders were buying at near the current price. Notably Seamus Cornelius was also the biggest seller.

Over the last year, we can see that insiders have bought 7.31m shares worth AU$3.2m. But they sold 4.18m shares for AU$1.7m. In the last twelve months there was more buying than selling by Danakali insiders. 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!

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

Does Danakali 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Danakali insiders own 24% of the company, worth about AU$39m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Danakali Tell Us?

The fact that there have been no Danakali insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Danakali insiders are doubting the company, and they do own shares. While we like knowing 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. For instance, we've identified 4 warning signs for Danakali (1 can't be ignored) you should be aware of.

Of course Danakali may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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This article by Simply Wall St is general in nature. 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.
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