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Even if it's not a huge purchase, we think it was good to see that Julian Babarczy, the Executive Chairman of Perpetual Resources Limited (ASX:PEC) recently shelled out AU$62k to buy stock, at AU$0.082 per share. However, it only increased their shares held by 3.1%, and it wasn't a huge purchase by absolute value, either.
Perpetual Resources Insider Transactions Over The Last Year
Notably, that recent purchase by Executive Chairman Julian Babarczy was not the only time they bought Perpetual Resources shares this year. Earlier in the year, they paid AU$0.034 per share in a AU$461k purchase. Even though the purchase was made at a significantly lower price than the recent price (AU$0.086), 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 insiders purchased 47.97m shares for AU$912k. But insiders sold 1.25m shares worth AU$25k. Overall, Perpetual Resources insiders were net buyers during the last year. They paid about AU$0.019 on average. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Perpetual 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 Perpetual 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. 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's great to see that Perpetual Resources insiders own 46% of the company, worth about AU$19m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Perpetual Resources Tell Us?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Perpetual Resources insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 5 warning signs we've spotted with Perpetual Resources (including 2 which shouldn't be ignored).
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.
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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