Peak Rare Earths Decline Means Insider Profits Down To AU$73k

Peak Rare Earths Limited (ASX:PEK) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 11% decline in the stock price. After accounting for the recent loss, the AU$290.0k worth of shares they purchased is now worth AU$362.5k, suggesting a good return on their investment.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Peak Rare Earths

The Last 12 Months Of Insider Transactions At Peak Rare Earths

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Ian Chambers for AU$130k worth of shares, at about AU$0.10 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.13), 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.

Peak Rare Earths insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Peak Rare Earths is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Peak Rare Earths Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Peak Rare Earths. Not only was there no selling that we can see, but they collectively bought AU$290k worth of shares. That shows some optimism about the company's future.

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. Our data suggests Peak Rare Earths insiders own 3.5% of the company, worth about AU$1.6m. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.

So What Do The Peak Rare Earths Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Peak Rare Earths insiders are expecting a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Peak Rare Earths. To help with this, we've discovered 4 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Peak Rare Earths.

Of course Peak Rare Earths 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.