It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Island Pharmaceuticals Limited's (ASX:ILA) case, it's fantastic news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Our free stock report includes 5 warning signs investors should be aware of before investing in Island Pharmaceuticals. Read for free now.

The Last 12 Months Of Insider Transactions At Island Pharmaceuticals

In the last twelve months, the biggest single purchase by an insider was when insider William Garner bought AU$443k worth of shares at a price of AU$0.07 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.15. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid AU$1.2m for 17.56m shares. But they sold 3.31m shares for AU$308k. Overall, Island Pharmaceuticals insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for Island Pharmaceuticals

Island Pharmaceuticals 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.

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. We usually like to see fairly high levels of insider ownership. It's great to see that Island Pharmaceuticals insiders own 50% of the company, worth about AU$16m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Island Pharmaceuticals Insiders?

It doesn't really mean much that no insider has traded Island Pharmaceuticals shares in the last quarter. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Island Pharmaceuticals insiders feel good about the company's 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. Case in point: We've spotted 5 warning signs for Island Pharmaceuticals you should be aware of, and 3 of these are a bit concerning.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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.