Insiders Who Purchased US$1.22m Of Atome Stock May Not Have Expected 13% Tumble

Insiders who bought US$1.22m worth of Atome Plc's (LON:ATOM) stock at an average buy price of US$0.63 over the last year may be disappointed by the recent 13% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$1.06m.

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.

Check out our latest analysis for Atome

The Last 12 Months Of Insider Transactions At Atome

The Chairman & Company Secretary Peter Levine made the biggest insider purchase in the last 12 months. That single transaction was for UK£500k worth of shares at a price of UK£0.75 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.55). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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 Atome insiders were buying shares, but not selling. The average buy price was around UK£0.63. These transactions suggest that insiders have considered the current price attractive. 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!

Atome 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 Atome Have Bought Stock Recently

Over the last quarter, Atome insiders have spent a meaningful amount on shares. Overall, seven insiders shelled out UK£750k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Atome

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Atome insiders own 24% of the company, worth about UK£6.3m. 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 Do The Atome Insider Transactions Indicate?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Atome shares, given these transactions (along with notable insider ownership of the company). 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. Case in point: We've spotted 5 warning signs for Atome you should be aware of, and 2 of these make us uncomfortable.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.