Insiders Rewarded With AU$1.1m Addition To Investment As Rubicon Water Stock Hits AU$67m

Rubicon Water Limited (ASX:RWL) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 12% resulting in a AU$7.2m addition to the company’s market value. Put another way, the original AU$8.90m acquisition is now worth AU$9.97m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Rubicon Water

The Last 12 Months Of Insider Transactions At Rubicon Water

The Non-Executive Chairman Gordon Dickinson made the biggest insider purchase in the last 12 months. That single transaction was for AU$5.7m worth of shares at a price of AU$0.25 each. Even though the purchase was made at a significantly lower price than the recent price (AU$0.28), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Rubicon Water insiders may have bought shares in the last year, but they didn't sell any. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Rubicon Water Insiders Bought Stock Recently

Over the last quarter, Rubicon Water insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought AU$8.9m worth of shares. This is a positive in our book as it implies some confidence.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It appears that Rubicon Water insiders own 39% of the company, worth about AU$26m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Rubicon Water Insiders?

It's certainly positive to see the recent insider purchases. 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. Given that insiders also own a fair bit of Rubicon Water we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 3 warning signs for Rubicon Water you should be aware of.

But note: Rubicon Water 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 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.