It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in XRF Scientific Limited's (ASX:XRF) case, it's fantastic news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for XRF Scientific

The Last 12 Months Of Insider Transactions At XRF Scientific

Notably, that recent purchase by Non-Executive Director David Brown was not the only time they bought XRF Scientific shares this year. They previously made an even bigger purchase of AU$137k worth of shares at a price of AU$0.65 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.61). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for 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. Notably David Brown was also the biggest seller.

Over the last year, we can see that insiders have bought 941.87k shares worth AU$403k. On the other hand they divested 210.94k shares, for AU$137k. In total, XRF Scientific insiders bought more than they sold over the last year. The average buy price was around AU$0.43. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!

XRF Scientific is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

XRF Scientific Insiders Bought Stock Recently

We saw some XRF Scientific insider buying shares in the last three months. They bought AU$187k worth in that time. But Non-Executive Director David Brown sold AU$137k worth. While it's good to see the insider buying, the net amount bought isn't enough for us to gain much confidence from it.

Insider Ownership

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. Insiders own 23% of XRF Scientific shares, worth about AU$19m. 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 Does This Data Suggest About XRF Scientific Insiders?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest XRF Scientific insiders are well aligned, and that they may think the share price is too low. While we like knowing 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. Every company has risks, and we've spotted 2 warning signs for XRF Scientific you should know about.

Of course XRF Scientific may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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