This Rainbow Rare Earths Insider Reduced Their Stake By 48%

Insiders were net sellers of Rainbow Rare Earths Limited's (LON:RBW ) stock during the past year. That is, insiders sold more stock than they bought.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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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. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of UK£0.13. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. 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.

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!

Check out our latest analysis for Rainbow Rare Earths

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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. A high insider ownership often makes company leadership more mindful of shareholder interests. Rainbow Rare Earths insiders own about UK£19m worth of shares. That equates to 24% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Rainbow Rare Earths Tell Us?

The fact that there have been no Rainbow Rare Earths insider transactions recently certainly doesn't bother us. Our analysis of Rainbow Rare Earths insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rainbow Rare Earths. For instance, we've identified 5 warning signs for Rainbow Rare Earths (3 make us uncomfortable) you should be aware of.

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.