With Lefroy Exploration Up 13%, Insider Buyers Count Their Returns

Last week, Lefroy Exploration Limited (ASX:LEX) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 13% last week, resulting in a AU$2.4m increase in the company's market worth, implying a 29% gain on their initial purchase. As a result, the stock they originally bought for AU$315.5k is now worth AU$405.6k.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Lefroy Exploration

The Last 12 Months Of Insider Transactions At Lefroy Exploration

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Michael Macgregor Davies bought AU$200k worth of shares at a price of AU$0.07 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.09), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

While Lefroy Exploration insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Lefroy Exploration is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Lefroy Exploration Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Lefroy Exploration. Not only was there no selling that we can see, but they collectively bought AU$270k worth of shares. This makes one think the business has some good points.

Insider Ownership

Many investors like to check how much of a company is owned by 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. Lefroy Exploration insiders own about AU$3.3m worth of shares. That equates to 16% of the company. 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 Lefroy Exploration Tell Us?

It is good to see recent purchasing. 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. Given that insiders also own a fair bit of Lefroy Exploration we think they are probably pretty confident of a bright 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. To help with this, we've discovered 4 warning signs (2 are significant!) that you ought to be aware of before buying any shares in Lefroy Exploration.

But note: Lefroy Exploration may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.