In spite of The Reject Shop Limited's recent pullback, insiders still gained about AU$682 after buying earlier this year.

The Reject Shop Limited (ASX:TRS) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 11% decline in the stock price. Even after accounting for the recent loss, the AU$324k worth of stock purchased by them is now worth AU$325k or in other words, their investment continues to give good returns.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Reject Shop

Reject Shop Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Steven Fisher bought AU$156k worth of shares at a price of AU$4.45 per share. That means that an insider was happy to buy shares at above the current price of AU$3.99. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing 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.

In the last twelve months Reject Shop insiders were buying shares, but not selling. The average buy price was around AU$3.98. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price. You can see the insider transactions (by companies and individuals) 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!

Reject Shop is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders At Reject Shop Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Reject Shop. Independent Non-Executive Director Mark Ward purchased AU$41k worth of shares in that period. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does Reject Shop 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Reject Shop insiders own about AU$10m worth of shares (which is 6.7% 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 Do The Reject Shop Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. Insiders own shares in Reject Shop and we see no evidence to suggest they are worried about the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Reject Shop 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, but not derivative transactions.

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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.