Insiders who bought AU$547.4k worth of Rectifier Technologies Ltd (ASX:RFT) stock in the last year recovered part of their losses as the stock rose by 10.0% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$193k since the time of purchase.

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.

See our latest analysis for Rectifier Technologies

The Last 12 Months Of Insider Transactions At Rectifier Technologies

In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Director Zong Wang bought AU$527k worth of shares at a price of AU$0.017 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.011). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Zong Wang.

Zong Wang bought 32.20m shares over the last 12 months at an average price of AU$0.017. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Rectifier Technologies 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.

Does Rectifier Technologies 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Rectifier Technologies insiders own 62% of the company, worth about AU$9.4m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Rectifier Technologies Tell Us?

The fact that there have been no Rectifier Technologies insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Rectifier Technologies insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we've found that Rectifier Technologies has 3 warning signs (2 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

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.