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Despite recent gains, FAR Limited (ASX:FAR) insiders are still down US$60k after purchasing last year

·3-min read

Insiders who bought US$120k worth of FAR Limited (ASX:FAR) stock in the last year recovered part of their losses as the stock rose by 67% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$60k 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.

Check out our latest analysis for FAR

The Last 12 Months Of Insider Transactions At FAR

The Independent Non-Executive Chairman Patrick O’Connor made the biggest insider purchase in the last 12 months. That single transaction was for AU$76k worth of shares at a price of AU$1.20 each. That means that an insider was happy to buy shares at above the current price of AU$0.60. 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. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Patrick O’Connor was the only individual insider to buy during the last year.

Patrick O’Connor purchased 100.00k shares over the year. The average price per share was AU$1.20. 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!


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.

Insider Ownership of FAR

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 5.3% of FAR shares, worth about AU$3.2m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

So What Do The FAR Insider Transactions Indicate?

It doesn't really mean much that no insider has traded FAR shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if FAR insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing FAR. Every company has risks, and we've spotted 4 warning signs for FAR (of which 2 are potentially serious!) you should know about.

Of course FAR 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, but not derivative transactions.

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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.