Far East Gold Reaches AU$55m Market Cap Benefiting Insider Stock Buying

Far East Gold Limited (ASX:FEG) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a AU$5.5m addition to the company’s market value. As a result, their original purchase of AU$292.1k worth of stock is now worth AU$322.2k.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Far East Gold Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Justin Werner bought AU$250k worth of shares at a price of AU$0.14 per share. That means that an insider was happy to buy shares at around the current price of AU$0.15. That means they have been optimistic about the company in the past, though they may have changed their mind. 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. Happily, the Far East Gold insiders decided to buy shares at close to current prices. We note that Justin Werner was both the biggest buyer and the biggest seller.

Over the last year, we can see that insiders have bought 2.15m shares worth AU$292k. On the other hand they divested 295.36k shares, for AU$40k. Overall, Far East Gold insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Far East Gold

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.

Far East Gold Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at Far East Gold. Independent Non-Executive Chairman Justin Werner only netted AU$20k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn't bother us.

Insider Ownership Of Far East Gold

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 18% of Far East Gold shares, worth about AU$9.9m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Far East Gold Insiders?

We did not see any insider buying in the last three months, but we did see selling. However, the sales are not big enough to concern us at all. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Far East Gold and we see no evidence to suggest they are worried about the 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. Our analysis shows 4 warning signs for Far East Gold (2 can't be ignored!) and we strongly recommend you look at these before investing.

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.