Australian Agricultural Projects Ltd (ASX:AAP) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 10%, resulting in a AU$1.8m rise in the company’s market capitalisation, translating to a gain of 26% on their initial investment. In other words, the original AU$2.00m purchase is now worth AU$2.52m.
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.
AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part – they are all under $10bn in marketcap – there is still time to get in early.
The Non Executive Director Daniel Stefanetti made the biggest insider purchase in the last 12 months. That single transaction was for AU$2.0m worth of shares at a price of AU$0.042 each. Even though the purchase was made at a significantly lower price than the recent price (AU$0.053), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
View our latest analysis for Australian Agricultural Projects
Australian Agricultural Projects is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Australian Agricultural Projects insiders own about AU$10m worth of shares (which is 54% 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.
The fact that there have been no Australian Agricultural Projects insider transactions recently certainly doesn’t bother us. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Australian Agricultural Projects insiders feel good about the company’s future. While it’s good to be aware of 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. For example, Australian Agricultural Projects has 4 warning signs (and 1 which can’t be ignored) we think you should know about.