Investors who take an interest in Advanced Flower Capital Inc. (NASDAQ:AFCG) should definitely note that the Executive Chairman, Leonard Tannenbaum, recently paid US$2.84 per share to buy US$257k worth of the stock. While that's a very decent purchase to our minds, it was proportionally a bit modest, boosting their holding by just 1.3%.

Advanced Flower Capital Insider Transactions Over The Last Year

In fact, the recent purchase by Executive Chairman Leonard Tannenbaum was not their only acquisition of Advanced Flower Capital shares this year. Earlier in the year, they paid US$4.81 per share in a US$2.2m purchase. That means that an insider was happy to buy shares at above the current price of US$3.62. 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 if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Advanced Flower Capital insiders bought shares during the last year, they didn't sell. The average buy price was around US$3.65. I'd consider this a positive as it suggests insiders see value at around the current price. 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!

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

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Advanced Flower Capital insiders own about US$32m worth of shares. That equates to 39% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Advanced Flower Capital Insiders?

It's certainly positive to see the recent insider purchases. 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 Advanced Flower Capital insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Advanced Flower Capital. For example, Advanced Flower Capital has 4 warning signs (and 2 which are potentially serious) we think you should know about.

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.

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.