Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Australian Rare Earths Limited (ASX:AR3), that sends out a positive message to the company's shareholders.

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.

View our latest analysis for Australian Rare Earths

The Last 12 Months Of Insider Transactions At Australian Rare Earths

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman Angus Barker bought AU$225k worth of shares at a price of AU$0.45 per share. That means that an insider was happy to buy shares at above the current price of AU$0.11. 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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Australian Rare Earths insiders may have bought shares in the last year, but they didn't sell any. They paid about AU$0.39 on average. These transactions suggest that insiders have considered the current price attractive. 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!

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 Australian Rare Earths Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Australian Rare Earths. Insiders bought AU$22k worth of 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 Rare Earths

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 27% of Australian Rare Earths shares, worth about AU$4.6m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.