We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Andromeda Metals Limited (ASX:ADN).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Andromeda Metals
In the last twelve months, the biggest single purchase by an insider was when Martin Spicer bought AU$80k worth of shares at a price of AU$0.005 per share. So it’s clear an insider wanted to buy, at around the current price. 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. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
In the last twelve months insiders purchased 37.98m shares for AU$224k. But they sold 4.50m for AU$34k. In total, Andromeda Metals insiders bought more than they sold over the last year. The average buy price was around AU$0.0059. Although they bought at below the recent price of AU$0.006 per share, it is good to see that insiders are willing to invest in the company. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insider Ownership of Andromeda Metals
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Andromeda Metals insiders own 30% of the company, worth about AU$1.9m. 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 Andromeda Metals Insider Transactions Indicate?
The fact that there have been no Andromeda Metals insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Overall we don’t see anything to make us think Andromeda Metals insiders are doubting the company, and they do own shares. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.