Stock Analysis

Insider Purchases Worth CA$3.48m See Losses As Rain City Resources Market Value Drops To CA$975k

CNSX:RAIN
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The recent price decline of 20% in Rain City Resources Inc.'s (CSE:RAIN) stock may have disappointed insiders who bought CA$3.48m worth of shares at an average price of CA$0.057 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 CA$1.22m, which is not great.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Rain City Resources

Rain City Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Emma Fairhurst for CA$1.0m worth of shares, at about CA$0.10 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$0.02). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Emma Fairhurst was also the biggest seller.

Happily, we note that in the last year insiders paid CA$3.5m for 60.79m shares. But they sold 14.56m shares for CA$218k. In the last twelve months there was more buying than selling by Rain City Resources insiders. Their average price was about CA$0.057. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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CNSX:RAIN Insider Trading Volume May 21st 2024

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

Rain City Resources Insiders Bought Stock Recently

It's good to see that Rain City Resources insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought CA$2.0m worth of shares. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Rain City Resources

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. Rain City Resources insiders own 75% of the company, currently worth about CA$727k based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Rain City Resources Insiders?

The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Rain City Resources. Nice! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 6 warning signs with Rain City Resources and understanding them should be part of your investment process.

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.