David Geraghty Bought 8.4% More Shares In Forrestania Resources
Forrestania Resources Limited (ASX:FRS) shareholders (or potential shareholders) will be happy to see that the Executive Chairman, David Geraghty, recently bought a whopping AU$2.2m worth of stock, at a price of AU$0.38. While that only increased their holding size by 8.4%, it is still a big swing by our standards.
Forrestania Resources Insider Transactions Over The Last Year
Notably, that recent purchase by Executive Chairman David Geraghty was not the only time they bought Forrestania Resources shares this year. Earlier in the year, they paid AU$0.36 per share in a AU$3.3m purchase. Even though the purchase was made at a significantly lower price than the recent price (AU$0.41), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
In the last twelve months insiders purchased 23.85m shares for AU$6.5m. On the other hand they divested 15.00m shares, for AU$2.6m. In the last twelve months there was more buying than selling by Forrestania Resources insiders. The average buy price was around AU$0.27. To my mind it is good that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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 Forrestania Resources
Forrestania Resources 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.
Insider Ownership
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. Forrestania Resources insiders own 33% of the company, currently worth about AU$210m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Forrestania Resources Insider Transactions Indicate?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Forrestania Resources insiders are well aligned, and quite possibly think the share price is too low. Looks promising! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Forrestania Resources (1 can't be ignored!) that we believe deserve your full attention.
But note: Forrestania Resources 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 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.