Strickland Metals Limited (ASX:STK) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 19%, resulting in a AU$31m rise in the company’s market capitalisation, translating to a gain of 27% on their initial investment. As a result, their original purchase of AU$785.7k worth of stock is now worth AU$999.1k.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Strickland Metals
The insider Shane Ball made the biggest insider purchase in the last 12 months. That single transaction was for AU$404k worth of shares at a price of AU$0.059 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.086. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
While Strickland Metals insiders bought shares during the last year, they didn’t sell. They paid about AU$0.068 on average. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today’s share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Strickland Metals 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.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Strickland Metals insiders own 19% of the company, worth about AU$37m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
It doesn’t really mean much that no insider has traded Strickland Metals shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Strickland Metals and their transactions don’t cause us concern. 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. To that end, you should learn about the 5 warning signs we’ve spotted with Strickland Metals (including 4 which don’t sit too well with us).
