Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Southern Gold Limited (ASX:SAU), it sends a favourable 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.

Check out our latest analysis for Southern Gold

Southern Gold Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Paul Shadbolt for AU$496k worth of shares, at about AU$0.12 per share. That means that even when the share price was higher than AU$0.024 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. We note that Paul Shadbolt was both the biggest buyer and the biggest seller.

Happily, we note that in the last year insiders paid AU$512k for 4.65m shares. On the other hand they divested 2.31m shares, for AU$290k. Overall, Southern Gold insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Southern Gold Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Southern Gold. In total, insider Paul Shadbolt bought AU$496k worth of shares in that time. But we did see insider Paul Shadbolt sell shares worth AU$290k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Southern Gold insiders own about AU$859k worth of shares (which is 13% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Southern Gold Tell Us?

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. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Southern Gold stock. While we like knowing 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 Southern Gold you should be aware of, and 3 of them are a bit unpleasant.

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, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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