Reversal Of Fortune For Iris Energy Insiders Who Made A US$82m Purchase

Simply Wall St · 09/15/2023 10:36

Insiders who bought US$82m worth of Iris Energy Limited (NASDAQ:IREN) stock in the last year have seen some of their losses recouped as the stock gained 12% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$67m since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Iris Energy

Iris Energy Insider Transactions Over The Last Year

The insider Wayne Quasha made the biggest insider purchase in the last 12 months. That single transaction was for US$82m worth of shares at a price of US$28.00 each. That means that an insider was happy to buy shares at above the current price of US$5.01. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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. Wayne Quasha was the only individual insider to buy shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:IREN Insider Trading Volume September 15th 2023

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Iris Energy

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 24% of Iris Energy shares, worth about US$58m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Iris Energy Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Iris Energy shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Iris Energy and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Iris Energy. You'd be interested to know, that we found 2 warning signs for Iris Energy and we suggest you have a look.

Of course Iris Energy may not be the best stock to buy. So you may wish to see this free collection of high quality 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 of direct interests only, but not derivative transactions or indirect interests.