Rex Trueform Group's Market Cap Drops To R230m Leaving Insiders With Losses

Insiders who acquired R11.8m worth of Rex Trueform Group Limited's (JSE:RTN) stock at an average price of R15.28 in the past 12 months may be dismayed by the recent 22% price decline. 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 R8.03m.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Rex Trueform Group

The Last 12 Months Of Insider Transactions At Rex Trueform Group

Over the last year, we can see that the biggest insider purchase was by CEO & Director Marcel Jonathan Golding for R9.9m worth of shares, at about R15.30 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being R10.40). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Over the last year, we can see that insiders have bought 771.76k shares worth R12m. On the other hand they divested 152.22k shares, for R2.3m. In total, Rex Trueform Group insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Rex Trueform Group is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does Rex Trueform Group Boast High Insider Ownership?

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Rex Trueform Group insiders own 23% of the company, worth about R53m. 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 Rex Trueform Group Tell Us?

It doesn't really mean much that no insider has traded Rex Trueform Group shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Rex Trueform Group and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 3 warning signs for Rex Trueform Group (1 doesn't sit too well with us) you should be aware of.

But note: Rex Trueform Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.