Those following along with Australian Agricultural Company Limited (ASX:AAC) will no doubt be intrigued by the recent purchase of shares by insider Bryan Glinton, who spent a stonking AU$6.5m on stock at an average price of AU$1.03. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 2.3%.
The Last 12 Months Of Insider Transactions At Australian Agricultural
In fact, the recent purchase by insider Bryan Glinton was not their only acquisition of Australian Agricultural shares this year. They previously made an even bigger purchase of AU$16m worth of shares at a price of AU$1.19 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$1.01). 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 always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Bryan Glinton.
Bryan Glinton purchased 26645766 shares over the year. The average price per share was AU$1.12. The chart below shows insider transactions (by 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.
Insider Ownership of Australian Agricultural
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Australian Agricultural insiders own about AU$288m worth of shares (which is 48% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Australian Agricultural Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Australian Agricultural insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Australian Agricultural may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.