Need To Know: Reward Minerals Limited (ASX:RWD) Insiders Have Been Buying Shares

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Reward Minerals Limited (ASX:RWD).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Reward Minerals

The Last 12 Months Of Insider Transactions At Reward Minerals

In the last twelve months, the biggest single purchase by an insider was when Executive Director Michael Ruane bought AU$434k worth of shares at a price of AU$0.14 per share. That implies that an insider found the current price of AU$0.15 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Reward Minerals share holders is that insiders were buying at near the current price. We note that Michael Ruane was both the biggest buyer and the biggest seller.

In the last twelve months insiders purchased 3.71m shares for AU$527k. But insiders sold 3.06m shares worth AU$430k. In total, Reward Minerals insiders bought more than they sold over the last year. 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!

Reward Minerals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Reward Minerals Have Bought Stock Recently

Over the last quarter, Reward Minerals insiders have spent a meaningful amount on shares. Executive Director Michael Ruane spent AU$80k on stock, and there wasn't any selling. That shows some optimism about the company's future.

Insider Ownership of Reward Minerals

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Reward Minerals insiders own 29% of the company, worth about AU$8.5m. 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 Reward Minerals Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives 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 Reward Minerals we think they are probably pretty confident of a bright future. While we like knowing 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. At Simply Wall St, we've found that Reward Minerals has 4 warning signs (2 make us uncomfortable!) that deserve your attention before going any further with your analysis.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

If you’re looking to trade Reward Minerals, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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