Insiders In Brazilian Rare Earths Still Down 33% On AU$90.2m Investment
Some of the losses seen by insiders who purchased AU$90.2m worth of Brazilian Rare Earths Limited (ASX:BRE) shares over the past year were recovered after the stock increased by 16% over the past week. However, total losses seen by insiders are still AU$29m since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Brazilian Rare Earths
The MD, CEO & Executive Director Bernardo Sanchez da Veiga made the biggest insider purchase in the last 12 months. That single transaction was for AU$90m worth of shares at a price of AU$6.45 each. That means that even when the share price was higher than AU$4.35 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Bernardo Sanchez da Veiga was the only individual insider to buy shares in the last twelve months. We note that Bernardo Sanchez da Veiga was both the biggest buyer and the biggest seller.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
View our latest analysis for Brazilian Rare Earths
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Does Brazilian Rare Earths Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Brazilian Rare Earths insiders own about AU$316m worth of shares (which is 26% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Brazilian Rare Earths 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. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Brazilian Rare Earths. Nice! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 2 warning signs for Brazilian Rare Earths (of which 1 makes us a bit uncomfortable!) you should know about.
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 of direct interests only, but not derivative transactions or indirect interests.
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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.