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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Kenmare Resources plc (LON:KMR), it sends a favourable message to the company's shareholders.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Kenmare Resources
Kenmare Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when MD & Executive Director Michael Carvill bought UK£46k worth of shares at a price of UK£4.32 per share. That means that an insider was happy to buy shares at above the current price of UK£3.24. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Kenmare Resources insiders were buying shares, but not selling. Their average price was about UK£3.79. 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!
Kenmare Resources is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
Insider Ownership Of Kenmare Resources
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. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own UK£3.3m worth of Kenmare Resources stock, about 1.1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.
What Might The Insider Transactions At Kenmare Resources Tell Us?
The fact that there have been no Kenmare Resources insider transactions recently certainly doesn't bother us. 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 Kenmare Resources insiders bought more shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 2 warning signs (1 can't be ignored!) that you ought to be aware of before buying any shares in Kenmare Resources.