Allied Farmers Reaches NZ$23m Market Cap Benefiting Insider Stock Buying

Insiders who bought Allied Farmers Limited (NZSE:ALF) stock in the last 12 months were richly rewarded last week. The company's market value increased by NZ$2.6m as a result of the stock's 12% gain over the same period. Put another way, the original NZ$196.5k acquisition is now worth NZ$217.5k.

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

Check out our latest analysis for Allied Farmers

The Last 12 Months Of Insider Transactions At Allied Farmers

In the last twelve months, the biggest single purchase by an insider was when MD & Non Independent Director Richard Milsom bought NZ$197k worth of shares at a price of NZ$0.75 per share. That means that an insider was happy to buy shares at around the current price of NZ$0.83. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Allied Farmers insider decided to buy shares at close to current prices. Richard Milsom was the only individual insider to buy shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Allied Farmers is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership

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 Allied Farmers insiders own 16% of the company, worth about NZ$3.7m. 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 Allied Farmers Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Allied Farmers shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Allied Farmers and their transactions don't cause us concern. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Allied Farmers.

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.