Stock Analysis

Should You Review Recent Insider Transactions At Yandal Resources Limited (ASX:YRL)?

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ASX:YRL
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Yandal Resources Limited (ASX:YRL), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

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

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The Last 12 Months Of Insider Transactions At Yandal Resources

The insider, Michael Ruane, made the biggest insider sale in the last 12 months. That single transaction was for AU$169k worth of shares at a price of AU$0.25 each. That means that an insider was selling shares at slightly below the current price (AU$0.38). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 5.7% of Michael Ruane's stake. Michael Ruane was the only individual insider to sell over the last year.

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!

insider-trading-volume
ASX:YRL Insider Trading Volume February 10th 2021

I will like Yandal Resources better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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. It appears that Yandal Resources insiders own 30% of the company, worth about AU$11m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Yandal Resources Insiders?

The fact that there have been no Yandal Resources insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Yandal Resources insiders. The modest level of insider ownership is, at least, some comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Yandal Resources. At Simply Wall St, we've found that Yandal Resources has 4 warning signs (1 is concerning!) 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.

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