Investors who take an interest in Advanced Flower Capital Inc. (NASDAQ:AFCG) should definitely note that the Executive Chairman, Leonard Tannenbaum, recently paid US$3.06 per share to buy US$140k worth of the stock. Although the purchase is not a big one, by either a percentage standpoint or absolute value, it can be seen as a good sign.

The Last 12 Months Of Insider Transactions At Advanced Flower Capital

Notably, that recent purchase by Executive Chairman Leonard Tannenbaum was not the only time they bought Advanced Flower Capital shares this year. They previously made an even bigger purchase of US$2.2m worth of shares at a price of US$4.81 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$3.44). 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. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Advanced Flower Capital insiders bought shares during the last year, they didn't sell. They paid about US$3.64 on average. These transactions suggest that insiders have considered the current price attractive. 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!

Advanced Flower Capital 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 Advanced Flower Capital Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Advanced Flower Capital insiders own 40% of the company, currently worth about US$33m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Advanced Flower Capital Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Advanced Flower Capital insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! While it's good to be aware of 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.

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.