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Insiders who bought RocketDNA Ltd. (ASX:RKT) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$2.6m as a result of the stock's 40% gain over the same period. As a result, the stock they originally bought for AU$459.2k is now worth AU$666.4k.
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.
View our latest analysis for RocketDNA
The Last 12 Months Of Insider Transactions At RocketDNA
Notably, that recent purchase by Michael Spencer is the biggest insider purchase of RocketDNA shares that we've seen in the last year. Even though the purchase was made at a significantly lower price than the recent price (AU$0.014), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
While RocketDNA insiders bought shares during the last year, they didn't sell. Their average price was about AU$0.0096. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!
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).
RocketDNA Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at RocketDNA. Specifically, insider Michael Spencer bought AU$317k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. RocketDNA insiders own about AU$2.1m worth of shares. That equates to 23% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.