Investors who take an interest in Rainbow Rare Earths Limited (LON:RBW) should definitely note that the Non-Executive Chairman, Adonis Pouroulis, recently paid UK￡0.098 per share to buy UK￡112k worth of the stock. Although the purchase only increased their holding by 1.3%, it is still a solid purchase in our view.

Check out our latest analysis for Rainbow Rare Earths

The Last 12 Months Of Insider Transactions At Rainbow Rare Earths

Notably, that recent purchase by Non-Executive Chairman Adonis Pouroulis was not the only time they bought Rainbow Rare Earths shares this year. They previously made an even bigger purchase of UK￡765k worth of shares at a price of UK￡0.14 per share. That means that an insider was happy to buy shares at above the current price of UK￡0.098. 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. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Adonis Pouroulis was the only individual insider to buy during the last year. Notably Adonis Pouroulis was also the biggest seller.

Adonis Pouroulis bought 6.75m shares over the last 12 months at an average price of UK￡0.13. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Rainbow Rare Earths is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership Of Rainbow 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. It appears that Rainbow Rare Earths insiders own 27% of the company, worth about UK￡17m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Rainbow Rare Earths Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Rainbow Rare Earths insiders are well aligned, and that they may think the share price is too low. 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. Our analysis shows 4 warning signs for Rainbow Rare Earths (2 don't sit too well with us!) and we strongly recommend you look at these before investing.