With Fortescue Metals Group Up 3.2%, Insider Buyers Count Their Returns

Insiders who bought Fortescue Metals Group Limited (ASX:FMG) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$2.0b as a result of the stock's 3.2% gain over the same period. As a result, the stock they originally bought for US$133k is now worth US$142k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Fortescue Metals Group

The Last 12 Months Of Insider Transactions At Fortescue Metals Group

In the last twelve months, the biggest single purchase by an insider was when Non Executive Director Sebastian Coe bought AU$99k worth of shares at a price of AU$19.72 per share. That means that an insider was happy to buy shares at around the current price of AU$20.57. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Fortescue Metals Group insiders decided to buy shares at close to current prices.

While Fortescue Metals Group insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders At Fortescue Metals Group Have Bought Stock Recently

Over the last quarter, Fortescue Metals Group insiders have spent a meaningful amount on shares. Overall, two insiders shelled out AU$121k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Fortescue Metals Group

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Fortescue Metals Group insiders own 0.4% of the company, currently worth about AU$238m based on the recent share price. 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 Does This Data Suggest About Fortescue Metals Group Insiders?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest Fortescue Metals Group insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! 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. To that end, you should learn about the 2 warning signs we've spotted with Fortescue Metals Group (including 1 which is significant).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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. 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.