Insiders who bought AU$1.7m worth of KGL Resources Limited's (ASX:KGL) stock at an average buy price of AU$0.12 over the last year may be disappointed by the recent 13% decrease in the stock. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$1.4m, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for KGL Resources

The Last 12 Months Of Insider Transactions At KGL Resources

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Denis Wood bought AU$1.6m worth of shares at a price of AU$0.12 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.10). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

KGL Resources insiders may have bought shares in the last year, but they didn't sell any. 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! insider-trading-volume

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this freelist of growing companies that insiders are buying.

KGL Resources Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at KGL Resources. Overall, two insiders shelled out AU$1.7m for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 11% of KGL Resources shares, worth about AU$6.4m, according to our data. 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 KGL Resources Insiders?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on KGL Resources stock. 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. At Simply Wall St, we've found that KGL Resources has 6 warning signs (2 are significant!) that deserve your attention before going any further with your analysis.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting 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.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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