Rainbow Rare Earths Insider Stock Sellers Must Be Relieved As Market Cap Falls To UK£106m

Over the past year, insiders sold US$70k worth of Rainbow Rare Earths Limited (LON:RBW) stock at an average price of US$0.12 per share allowing them to get the most out of their money. The company's market worth decreased by UK£29m over the past week after the stock price dropped 21%, although insiders were able to minimize their losses

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.

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The Last 12 Months Of Insider Transactions At Rainbow Rare Earths

Over the last year, we can see that the biggest insider sale was by the Chief Financial Officer, Peter Andrew Gardner, for UK£70k worth of shares, at about UK£0.12 per share. That means that even when the share price was below the current price of UK£0.17, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 48% of Peter Andrew Gardner's stake. The only individual insider seller over the last year was Peter Andrew Gardner. Notably Peter Andrew Gardner was also the biggest buyer, having purchased UK£70k worth of shares.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Rainbow Rare Earths

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Does Rainbow Rare Earths Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Rainbow Rare Earths insiders own 24% of the company, worth about UK£25m. 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 Rainbow Rare Earths Insiders?

It doesn't really mean much that no insider has traded Rainbow Rare Earths shares in the last quarter. We don't take much encouragement from the transactions by Rainbow Rare Earths insiders. The modest level of insider ownership is, at least, some comfort. 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. At Simply Wall St, we've found that Rainbow Rare Earths has 4 warning signs (2 are a bit concerning!) that deserve your attention before going any further with your analysis.

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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.