It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Bitfarms Ltd.'s (TSE:BITF) case, it's fantastic news for shareholders.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Bitfarms

The Last 12 Months Of Insider Transactions At Bitfarms

The CEO & Director Benjamin Gagnon made the biggest insider purchase in the last 12 months. That single transaction was for CA$242k worth of shares at a price of CA$2.42 each. That means that an insider was happy to buy shares at above the current price of CA$1.62. 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.

Happily, we note that in the last year insiders paid CA$676k for 274.58k shares. On the other hand they divested 49.67k shares, for CA$142k. In total, Bitfarms insiders bought more than they sold over the last year. 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!

Bitfarms is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Bitfarms Have Bought Stock Recently

Over the last quarter, Bitfarms insiders have spent a meaningful amount on shares. In total, insiders bought CA$519k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Does Bitfarms 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. We usually like to see fairly high levels of insider ownership. Our data suggests Bitfarms insiders own 0.2% of the company, worth about CA$1.7m. We prefer to see high levels of insider ownership.

So What Do The Bitfarms Insider Transactions Indicate?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Bitfarms insiders are expecting a bright future. While it's good to be aware of 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. Our analysis shows 2 warning signs for Bitfarms (1 is a bit unpleasant!) and we strongly recommend you look at these before investing.

Of course Bitfarms 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.