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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in XRF Scientific Limited’s (ASX:XRF) instance, it’s good news for shareholders.
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 XRF Scientific
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director David Brown bought AU$137k worth of shares at a price of AU$0.65 per share. So it’s clear an insider wanted to buy, at around the current price, which is AU$0.67. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. Happily, the XRF Scientific insiders decided to buy shares at close to current prices. We note that David Brown was both the biggest buyer and the biggest seller.
In the last twelve months insiders purchased 448.37k shares for AU$280k. But they sold 240.94k shares for AU$153k. Overall, XRF Scientific insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. XRF Scientific insiders own about AU$22m worth of shares. That equates to 24% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
The fact that there have been no XRF Scientific insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in XRF Scientific and their transactions don’t cause us concern. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing XRF Scientific. Case in point: We’ve spotted 2 warning signs for XRF Scientific you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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.
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