We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in RMA Global Limited (ASX:RMY).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At RMA Global
Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman David Williams for AU$510k worth of shares, at about AU$0.17 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.24. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
In the last twelve months insiders paid AU$2.2m for 11.1m shares purchased. While RMA Global insiders bought shares last year, they didn’t sell. Their average price was about AU$0.19. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
RMA Global Insiders Bought Stock Recently
We saw some RMA Global insider buying shares in the last three months. Co-Founder Edward van Roosendaal purchased AU$30k worth of shares in that period. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Does RMA Global Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. RMA Global insiders own about AU$54m worth of shares (which is 62% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The RMA Global Insider Transactions Indicate?
Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn’t worth writing home about. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like RMA Global insiders think the business has merit. Of course, the future is what matters most. So if you are interested in RMA Global, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.