Insiders Give Up AU$63k As Rox Resources Stock Drops To AU$0.15

The recent price decline of 16% in Rox Resources Limited's (ASX:RXL) stock may have disappointed insiders who bought AU$217.6k worth of shares at an average price of AU$0.22 in the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$155.0k, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Rox Resources

Rox Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when CEO, MD & Non-Executive Director Robert Ryan bought AU$98k worth of shares at a price of AU$0.24 per share. That means that even when the share price was higher than AU$0.15 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. 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.

Rox Resources insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.22. These transactions suggest that insiders have considered the current price attractive. 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!

Rox Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Rox Resources Have Bought Stock Recently

Over the last quarter, Rox Resources insiders have spent a meaningful amount on shares. In total, insiders bought AU$120k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Does Rox Resources Boast High 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. Our data indicates that Rox Resources insiders own about AU$4.9m worth of shares (which is 8.5% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About Rox Resources Insiders?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Rox Resources insiders are expecting a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 5 warning signs for Rox Resources (4 shouldn't be ignored!) that we believe deserve your full attention.

But note: Rox 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 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.