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Potential Petra Diamonds Limited (LON:PDL) shareholders may wish to note that the Non-Executive Chair, Jose Vargas Gomez, recently bought UK£89k worth of stock, paying UK£0.26 for each share. Although the purchase only increased their holding by 1.6%, it is still a solid purchase in our view.
See our latest analysis for Petra Diamonds
The Last 12 Months Of Insider Transactions At Petra Diamonds
Notably, that recent purchase by Non-Executive Chair Jose Vargas Gomez was not the only time they bought Petra Diamonds shares this year. They previously made an even bigger purchase of UK£1.1m worth of shares at a price of UK£0.27 per share. That means that even when the share price was higher than UK£0.27 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
While Petra Diamonds insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Petra Diamonds 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
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Petra Diamonds insiders own 12% of the company, worth about UK£6.5m. But they may have an indirect interest through a corporate structure that we haven't picked up on. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Does This Data Suggest About Petra Diamonds Insiders?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Petra Diamonds insiders are reasonably well aligned, and optimistic for the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Petra Diamonds has 2 warning signs (and 1 which is significant) we think you should know about.