Australian Rare Earths Limited (ASX:AR3) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 28% decline in the stock price. Even after accounting for the recent loss, the AU$355k worth of stock purchased by them is now worth AU$467k or in other words, their investment continues to give good returns.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Australian Rare Earths

Australian Rare Earths Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Non-executive Director Angus Barker bought AU$197k worth of shares at a price of AU$0.27 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.36. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months Australian Rare Earths insiders were buying shares, but not selling. 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!

Australian Rare Earths 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.

Insiders At Australian Rare Earths Have Bought Stock Recently

Over the last quarter, Australian Rare Earths insiders have spent a meaningful amount on shares. In total, insiders bought AU$305k 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

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Australian Rare Earths insiders own about AU$14m worth of shares. That equates to 30% 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.

So What Do The Australian Rare Earths Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Australian Rare Earths we think they are probably pretty confident of a bright future. 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. For instance, we've identified 5 warning signs for Australian Rare Earths (3 are potentially serious) you should be aware of.

Of course Australian Rare Earths 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.

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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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