RocketDNA Insiders May Regret Not Buying More, Market Cap Hits AU$9.2m

RocketDNA Ltd. (ASX:RKT) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 40%, resulting in a AU$2.6m rise in the company's market capitalisation, translating to a gain of 45% on their initial investment. As a result, the stock they originally bought for AU$459.2k is now worth AU$666.4k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for RocketDNA

RocketDNA Insider Transactions Over The Last Year

In fact, the recent purchase by Michael Spencer was the biggest purchase of RocketDNA shares made by an insider individual in the last twelve months, according to our records. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.014. 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.

RocketDNA insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around AU$0.0096. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's 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!

RocketDNA is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At RocketDNA Have Bought Stock Recently

It's good to see that RocketDNA insiders have made notable investments in the company's shares. Specifically, insider Michael Spencer bought AU$317k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. RocketDNA insiders own about AU$2.1m worth of shares. That equates to 23% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At RocketDNA Tell Us?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest RocketDNA insiders are well aligned, and that they may think the share price is too low. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, RocketDNA has 5 warning signs (and 2 which are potentially serious) we think you should know about.

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 of direct interests only, but not derivative transactions or indirect interests.

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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.