Insiders Of Rapid Critical Metals Are Up 72% On Their AU$2.23m Purchase

Last week, Rapid Critical Metals Limited (ASX:RCM) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 11% last week, resulting in a AU$4.8m increase in the company's market worth, implying a 72% gain on their initial purchase. As a result, their original purchase of AU$2.23m worth of stock is now worth AU$3.84m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Rapid Critical Metals Insider Transactions Over The Last Year

In fact, the recent purchase by Eric Sprott was the biggest purchase of Rapid Critical Metals shares made by an insider individual in the last twelve months, according to our records. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.061. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Rapid Critical Metals insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for Rapid Critical Metals

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.

Rapid Critical Metals Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Rapid Critical Metals. We can see that insider Eric Sprott paid AU$2.1m for shares in the company. No-one sold. That shows some optimism about the company's future.

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. We usually like to see fairly high levels of insider ownership. It appears that Rapid Critical Metals insiders own 20% of the company, worth about AU$9.6m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Rapid Critical Metals Tell Us?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. 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 Rapid Critical Metals we think they are probably pretty confident of a bright future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 6 warning signs for Rapid Critical Metals (5 are a bit unpleasant) you should be aware of.

But note: Rapid Critical Metals 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.