Insiders' AU$1.21m Investments In Red Following Rubicon Water's AU$15m Dip In Market Value

The recent 14% drop in Rubicon Water Limited's (ASX:RWL) stock could come as a blow to insiders who purchased AU$1.21m worth of stock at an average buy price of AU$0.62 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$1.04m which is not ideal.

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.

View our latest analysis for Rubicon Water

The Last 12 Months Of Insider Transactions At Rubicon Water

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman Gordon Dickinson bought AU$698k worth of shares at a price of AU$0.62 per share. That means that even when the share price was higher than AU$0.54 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months Rubicon Water insiders were buying shares, but not selling. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Have Rubicon Water Insiders Traded Recently?

Over the last three months, we've seen a bit of insider buying at Rubicon Water. Independent Non-Executive Director Lynda Elfriede O’Grady shelled out AU$8.6k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.

Does Rubicon Water Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Rubicon Water insiders own 36% of the company, worth about AU$33m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Rubicon Water Insiders?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Rubicon Water insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 2 warning signs we've spotted with Rubicon Water (including 1 which is a bit unpleasant).

Of course Rubicon Water 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 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.