Some of the losses seen by insiders who purchased AU$4.34m worth of WA Kaolin Limited (ASX:WAK) shares over the past year were recovered after the stock increased by 19% over the past week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at AU$707k since the time of purchase.

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.

Check out our latest analysis for WA Kaolin

The Last 12 Months Of Insider Transactions At WA Kaolin

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Kenneth Hall for AU$2.8m worth of shares, at about AU$0.06 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.05). 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.

In the last twelve months WA Kaolin insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

WA Kaolin Insiders Bought Stock Recently

It's good to see that WA Kaolin insiders have made notable investments in the company's shares. We can see that insider Timothy Martin paid AU$306k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

Does WA Kaolin Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. WA Kaolin insiders own about AU$13m worth of shares (which is 49% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The WA Kaolin Insider Transactions Indicate?

It is good to see the recent insider purchase. 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. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about WA Kaolin. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing WA Kaolin. To assist with this, we've discovered 4 warning signs that you should run your eye over to get a better picture of WA Kaolin.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list 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 of direct interests only, but not derivative transactions or indirect interests.

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.