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Insiders who acquired UK£78k worth of Red Rock Resources plc's (LON:RRR) stock at an average price of UK£0.0052 in the past 12 months may be dismayed by the recent 16% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth UK£32k which is not ideal.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Red Rock Resources
The Last 12 Months Of Insider Transactions At Red Rock Resources
Over the last year, we can see that the biggest insider purchase was by Executive Chairman & CEO Andrew McMillan Bell for UK£78k worth of shares, at about UK£0.0053 per share. That means that even when the share price was higher than UK£0.0022 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Andrew McMillan Bell. Notably Andrew McMillan Bell was also the biggest seller.
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!
Red Rock 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 Red Rock Resources Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 21% of Red Rock Resources shares, worth about UK£646k. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Red Rock Resources Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Red Rock Resources and we see no evidence to suggest they are worried about the future. 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. Be aware that Red Rock Resources is showing 4 warning signs in our investment analysis, and 2 of those are potentially serious...