Insiders In Nufarm Still Down 12% On AU$759.4k Investment

Insiders who bought AU$759.4k worth of Nufarm Limited (ASX:NUF) stock in the last year recovered part of their losses as the stock rose by 12% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling AU$94k.

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.

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The Last 12 Months Of Insider Transactions At Nufarm

The Independent Non-Executive Chairman John Gillam made the biggest insider purchase in the last 12 months. That single transaction was for AU$292k worth of shares at a price of AU$3.89 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$2.61). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Nufarm insiders were buying shares, but not selling. The average buy price was around AU$2.98. This is nice to see since it implies that insiders might see value around current prices. 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!

Check out our latest analysis for Nufarm

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Nufarm Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Nufarm. In total, insiders bought AU$418k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Nufarm insiders have about 0.7% of the stock, worth approximately AU$7.5m. We consider this fairly low insider ownership.

What Might The Insider Transactions At Nufarm Tell Us?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Nufarm insiders are expecting a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Nufarm 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.