We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Ariana Resources plc (LON:AAU).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Ariana Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive Chairman & Company Secretary Michael de Villiers bought UK£398k worth of shares at a price of UK£0.025 per share. We do like to see buying, but this purchase was made at well below the current price of UK£0.041. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Michael de Villiers bought 22.56m shares over the last 12 months at an average price of UK£0.025. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Ariana Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Ariana Resources 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 11% of Ariana Resources shares, worth about UK£4.9m, according to our data. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Ariana Resources Insiders?
It doesn't really mean much that no insider has traded Ariana Resources shares in the last quarter. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Ariana Resources stock. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Ariana Resources is showing 5 warning signs in our investment analysis, and 2 of those don't sit too well with us...
Of course Ariana Resources 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.
This article by Simply Wall St is general in nature. 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.
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