Insiders might want to re-evaluate their AU$2.8m stock purchase as RMA Global Limited (ASX:RMY) drops to AU$46m

Published
June 25, 2022
ASX:RMY
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The recent price decline of 17% in RMA Global Limited's (ASX:RMY) stock may have disappointed insiders who bought AU$2.8m worth of shares at an average price of AU$0.19 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$1.5m, which is not great.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for RMA Global

The Last 12 Months Of Insider Transactions At RMA Global

The Non-Executive Chairman David Williams made the biggest insider purchase in the last 12 months. That single transaction was for AU$1.6m worth of shares at a price of AU$0.19 each. That means that an insider was happy to buy shares at above the current price of AU$0.096. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. David Williams was the only individual insider to buy shares in the last twelve months.

David Williams bought a total of 15.22m shares over the year at an average price of AU$0.19. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:RMY Insider Trading Volume June 25th 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does RMA Global 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. We usually like to see fairly high levels of insider ownership. RMA Global insiders own about AU$27m worth of shares (which is 58% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At RMA Global Tell Us?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about RMA Global. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing RMA Global. Case in point: We've spotted 3 warning signs for RMA Global you should be aware of, and 1 of them doesn't sit too well with us.

Of course RMA Global may not be the best stock to buy. So you may wish to see this free collection of high quality 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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