Insider buy alert: Arafura chair snaps up 100,000 beaten-up shares!

Is insider buying good news for this stock?

| More on:
Man presses green buy button and red sell button on a graph.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Arafura Rare Earths Ltd (ASX: ARU) shares have been on fire in recent sessions.

For example, since this time last week, the rare earths developer's shares have risen over 30%.

That's despite them trading 5% lower in afternoon trade on Tuesday.

The catalyst for this rise has been some huge news in respect to the development of the Nolans Neodymium-Praseodymium (NdPr) Project in the Northern Territory.

That announcement revealed that the Federal Government has conditionally approved a US$533 million debt finance package to support Arafura's flagship project.

This includes a US$125 million limited-recourse senior debt facility which was made available through the Government's A$4 billion Critical Minerals Facility. In addition, there is A$150 million in limited-recourse senior debt facilities from the Northern Australia Infrastructure Facility (NAIF).

Insider buys Arafura Rare Earths shares

If you thought it was too late to pick up shares after this recent rally, then you might be wrong judging by what an insider is doing.

According to a change of director's interest notice, the company's non-executive chairman, Mark Southey, was buying Arafura shares on-market on Monday.

The notice reveals that Southey picked up 100,000 shares for an average of 21 cents per share. This represents a total consideration of $21,000.

This purchase boosts Southey's holding to a total of 332,140 shares owned directly and 580,760 shares owned by his super fund.

It seems that this chair still sees significant value in Arafura shares. Especially given that they remain down 60% on a 12-month basis despite the recent rebound.

Is this a buy signal?

Insider buying is often regarded as a bullish indicator. This is because few people know a company and its intrinsic value better than its own directors.

If they are buying, it suggests that they are confident in the direction the company is heading.

After all, you wouldn't be buying if you thought your company's shares were overvalued or if things weren't going well.

However, it is worth remembering that insiders don't always get it right. So, investors should do their own due diligence before jumping in feet first.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Materials Shares

Rio Tinto shares on watch after naming new CEO

The mining giant has found its new leader.

Read more »

Three miners looking at a tablet.
Materials Shares

How much upside does Macquarie project for South32 shares?

The miner faces more headwinds, but the broker maintains its optimism.

Read more »