The recent 13% drop in First Au Limited's (ASX:FAU) stock could come as a blow to insiders who purchased AU$556k worth of stock at an average buy price of AU$0.0046 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$427k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for First Au

The Last 12 Months Of Insider Transactions At First Au

Over the last year, we can see that the biggest insider purchase was by Director Daniel Raihani for AU$249k worth of shares, at about AU$0.0044 per share. That means that an insider was happy to buy shares at above the current price of AU$0.0035. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. 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.

Happily, we note that in the last year insiders paid AU$556k for 122.00m shares. But insiders sold 15.73m shares worth AU$79k. In total, First Au insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

First Au is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of First Au

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. First Au insiders own about AU$1.3m worth of shares. That equates to 25% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The First Au Insider Transactions Indicate?

The fact that there have been no First Au insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think First Au insiders are doubting the company, and they do own shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 5 warning signs with First Au and understanding these should be part of your investment process.