How Many Rafaella Resources Limited (ASX:RFR) Shares Did Insiders Buy, In The Last Year?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Rafaella Resources Limited (ASX:RFR).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for Rafaella Resources

Rafaella Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Adam Blumenthal for AU$100k worth of shares, at about AU$0.18 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.075). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid AU$160k for 1.67m shares. On the other hand they divested 1.39m shares, for AU$109k. In total, Rafaella Resources insiders bought more than they sold over the last year. They paid about AU$0.095 on average. These transactions suggest that insiders have considered the current price attractive. 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.

Are Rafaella Resources Insiders Buying Or Selling?

We've only seen a tiny insider purchase valued at AU$2.0k, in the last three months. So it is hard to draw any conclusion about how insiders are feeling about the stock, from these recent trades.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 16% of Rafaella Resources shares, worth about AU$1.4m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Rafaella Resources Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Rafaella Resources and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rafaella Resources. Every company has risks, and we've spotted 4 warning signs for Rafaella Resources (of which 3 can't be ignored!) you should know about.

But note: Rafaella Resources 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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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