Adonis Pouroulis Bought 1.3% More Shares In Rainbow Rare Earths

Investors who take an interest in Rainbow Rare Earths Limited (LON:RBW) should definitely note that the Non-Executive Chairman, Adonis Pouroulis, recently paid UK£0.098 per share to buy UK£112k worth of the stock. Although the purchase only increased their holding by 1.3%, it is still a solid purchase in our view.

Check out our latest analysis for Rainbow Rare Earths

The Last 12 Months Of Insider Transactions At Rainbow Rare Earths

Notably, that recent purchase by Non-Executive Chairman Adonis Pouroulis was not the only time they bought Rainbow Rare Earths shares this year. They previously made an even bigger purchase of UK£765k worth of shares at a price of UK£0.14 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.10). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Adonis Pouroulis was the only individual insider to buy during the last year. Notably Adonis Pouroulis was also the biggest seller.

Adonis Pouroulis purchased 6.75m shares over the year. The average price per share was UK£0.13. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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).

Insider Ownership Of Rainbow Rare Earths

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Rainbow Rare Earths insiders own about UK£18m worth of shares. That equates to 28% 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 Rainbow Rare Earths Tell Us?

It is good to see the recent insider purchase. 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 Rainbow Rare Earths shares, given these transactions (along with notable insider ownership of the company). While we like knowing 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, Rainbow Rare Earths has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.

But note: Rainbow Rare Earths 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.