Quite a few insiders have dramatically grown their holdings in Australian Agricultural Company Limited (ASX:AAC) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Australian Agricultural

The Last 12 Months Of Insider Transactions At Australian Agricultural

Over the last year, we can see that the biggest insider purchase was by insider Bryan Glinton for AU$23m worth of shares, at about AU$1.91 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$1.49). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Australian Agricultural 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! insider-trading-volume

Australian Agricultural is not the only stock insiders are buying. So take a peek at this freelist of growing companies with insider buying.

Insiders At Australian Agricultural Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Australian Agricultural. Independent Non-Executive Director Marc Blazer shelled out AU$30k for shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.



Insider Ownership Of Australian Agricultural

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Australian Agricultural insiders own 71% of the company, currently worth about AU$636m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Australian Agricultural Tell Us?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Australian Agricultural insiders think the business has merit. 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. While conducting our analysis, we found that Australian Agricultural has 2 warning signs and it would be unwise to ignore these.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this freelist of interesting companies, that have HIGH return on equity and low debt.

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.