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 Rox Resources Limited (ASX:RXL).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
Rox Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO, MD & Director Alexander Passmore bought AU$100k worth of shares at a price of AU$0.01 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.029), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
In the last twelve months Rox Resources insiders were buying shares, but not selling. They paid about AU$0.011 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Rox Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Rox 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. From our data, it seems that Rox Resources insiders own 8.2% of the company, worth about AU$3.4m. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Rox Resources Tell Us?
It doesn't really mean much that no insider has traded Rox Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Rox Resources insiders bought more shares in the company. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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