We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell RMA Global Limited (ASX:RMY), you may well want to know whether insiders have been buying or selling.
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 Colombia 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’.
The Last 12 Months Of Insider Transactions At RMA Global
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman David Williams bought AU$822k worth of shares at a price of AU$0.25 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term. Notably David Williams was also the biggest seller, having sold AU$24k worth of shares.
Over the last year, we can see that insiders have bought 10.92m shares worth AU$2.3m. On the other hand they divested 191.88k shares, for AU$24k. In the last twelve months there was more buying than selling by RMA Global insiders. Their average price was about AU$0.21. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of AU$0.23. You can see the insider transactions over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
RMA Global 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 RMA Global Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at RMA Global. Overall, 2 insiders shelled out AU$651k for shares in the company — and none sold. This is a positive in our book as it implies some confidence.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that RMA Global insiders own 61% of the company, worth about AU$52m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The RMA Global Insider Transactions Indicate?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about RMA Global. One for the watchlist, at least! 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.