Insiders who bought Alicanto Minerals Limited (ASX:AQI) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$3.0m as a result of the stock's 17% gain over the same period. In other words, the original AU$242.0k purchase is now worth AU$362.4k.

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.

See our latest analysis for Alicanto Minerals

Alicanto Minerals Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Interim Executive Chair Raymond Shorrocks bought AU$100k worth of shares at a price of AU$0.04 per share. That means that even when the share price was higher than AU$0.027 (the recent price), an insider wanted to purchase shares. 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. 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 Alicanto Minerals insiders bought shares during the last year, they didn't sell. The average buy price was around AU$0.018. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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).

Insiders At Alicanto Minerals Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Alicanto Minerals. Not only was there no selling that we can see, but they collectively bought AU$142k worth of shares. This makes one think the business has some good points.

Does Alicanto Minerals Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Alicanto Minerals insiders own about AU$3.2m worth of shares. That equates to 16% 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 Alicanto Minerals Insider Transactions Indicate?

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. When combined with notable insider ownership, these factors suggest Alicanto Minerals insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 6 warning signs for Alicanto Minerals (3 are a bit unpleasant!) that we believe deserve your full attention.

Of course Alicanto Minerals 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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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.