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The recent 11% drop in Adelong Gold Limited's (ASX:ADG) stock could come as a blow to insiders who purchased AU$369.5k worth of stock at an average buy price of AU$0.0045 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$326.7k, which is not what they expected.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Adelong Gold
The Last 12 Months Of Insider Transactions At Adelong Gold
Over the last year, we can see that the biggest insider purchase was by insider Peter Proksa for AU$160k worth of shares, at about AU$0.006 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.004). 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. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Adelong Gold insiders were buying shares, but not selling. The average buy price was around AU$0.0045. I'd consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by companies and 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 always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership Of Adelong Gold
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Adelong Gold insiders own about AU$1.8m worth of shares (which is 41% 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 Does This Data Suggest About Adelong Gold Insiders?
The fact that there have been no Adelong Gold insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Adelong Gold insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Adelong Gold. Every company has risks, and we've spotted 6 warning signs for Adelong Gold you should know about.