As Rafael Holdings, Inc.'s market cap (NYSE:RFL) drops to US$43m, insiders might be questioning their decision to buy earlier this year

The recent price decline of 11% in Rafael Holdings, Inc.'s (NYSE:RFL) stock may have disappointed insiders who bought US$6.0m worth of shares at an average price of US$1.86 in the past 12 months. 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$5.7m.

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.

View our latest analysis for Rafael Holdings

Rafael Holdings Insider Transactions Over The Last Year

The Founder & Chairman Howard Jonas made the biggest insider purchase in the last 12 months. That single transaction was for US$6.0m worth of shares at a price of US$1.86 each. That means that an insider was happy to buy shares at above the current price of US$1.78. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Howard Jonas was the only individual insider to buy during the last year.

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!

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

Does Rafael Holdings Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Rafael Holdings insiders own about US$16m worth of shares. That equates to 37% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Rafael Holdings Tell Us?

The fact that there have been no Rafael Holdings insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Rafael Holdings insiders are doubting the company, and they do own shares. 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. Be aware that Rafael Holdings is showing 5 warning signs in our investment analysis, and 3 of those don't sit too well with us...

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, but not derivative transactions.

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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.