When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Terra Metals Limited’s (ASX:TM1) instance, it’s good news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Terra Metals
The Last 12 Months Of Insider Transactions At Terra Metals
In fact, the recent purchase by Independent Non-Executive Chairman Ian Middlemas was not their only acquisition of Terra Metals shares this year. They previously made an even bigger purchase of AU$260k worth of shares at a price of AU$0.052 per share. That means that even when the share price was higher than AU$0.043 (the recent price), an insider wanted to purchase shares. 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months Terra Metals insiders were buying shares, but not selling. The average buy price was around AU$0.045. This is nice to see since it implies that insiders might see value around current prices. 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 undervalued small cap companies that insiders are buying.
Terra Metals Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Terra Metals. Overall, three insiders shelled out AU$174k for shares in the company — and none sold. This makes one think the business has some good points.
Does Terra Metals Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Terra Metals insiders own about AU$1.9m worth of shares (which is 11% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Does This Data Suggest About Terra Metals Insiders?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Terra Metals insiders are reasonably well aligned, and optimistic for the future. 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. Be aware that Terra Metals is showing 4 warning signs in our investment analysis, and 3 of those don’t sit too well with us…
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.
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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.
