Aurum Resources' Recent Gains Improve Losses On Insider Purchases Worth AU$840.0k

Insiders who bought AU$840.0k worth of Aurum Resources Limited (ASX:AUE) stock in the last year recovered part of their losses as the stock rose by 11% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling AU$154k.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Aurum Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by MD & Non-Independent Non-Executive Director Caigen Wang for AU$840k worth of shares, at about AU$0.60 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.49). 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. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Caigen Wang.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Aurum Resources

Aurum Resources is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does Aurum Resources Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. Aurum Resources insiders own about AU$35m worth of shares. That equates to 14% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Aurum Resources Tell Us?

It doesn't really mean much that no insider has traded Aurum Resources shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Aurum Resources and we see no evidence to suggest they are worried about the future. 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 2 warning signs with Aurum Resources and understanding them should be part of your investment process.

Of course Aurum Resources 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 of direct interests only, but not derivative transactions or indirect interests.

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