A African Rainbow Minerals Limited (JSE:ARI) insider lowered their holding by 47% earlier this year

By
Simply Wall St
Published
January 13, 2022
JSE:ARI
Source: Shutterstock

From what we can see, insiders were net sellers in African Rainbow Minerals Limited's (JSE:ARI ) during the past 12 months. That is, insiders sold the stock in greater numbers than they purchased it.

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

See our latest analysis for African Rainbow Minerals

The Last 12 Months Of Insider Transactions At African Rainbow Minerals

Over the last year, we can see that the biggest insider sale was by the Executive Director of IR & New Business Development and Executive Director, Jongisa Magagula, for R1.7m worth of shares, at about R285 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is R250. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Jongisa Magagula.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
JSE:ARI Insider Trading Volume January 13th 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. African Rainbow Minerals insiders own about R272m worth of shares. That equates to 0.6% 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 African Rainbow Minerals Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the African Rainbow Minerals insiders selling. 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. Our analysis shows 3 warning signs for African Rainbow Minerals (1 is potentially serious!) and we strongly recommend you look at them before investing.

Of course African Rainbow Minerals may not be the best stock to buy. So you may wish to see this free collection of high quality 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, but not derivative transactions.

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