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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Mount Ridley Mines Limited's (ASX:MRD) case, it's fantastic news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Mount Ridley Mines
The insider Roger Blake made the biggest insider purchase in the last 12 months. That single transaction was for AU$421k worth of shares at a price of AU$0.0025 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.007. 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.
In the last twelve months insiders purchased 305.00m shares for AU$431k. But they sold 30.68m shares for AU$276k. Overall, Mount Ridley Mines insiders were net buyers during the last year. The average buy price was around AU$0.0014. To my mind it is good 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 the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Mount Ridley Mines
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. Mount Ridley Mines insiders own about AU$10m worth of shares. That equates to 26% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Mount Ridley Mines Tell Us?
The fact that there have been no Mount Ridley Mines insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Mount Ridley Mines and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Mount Ridley Mines. Be aware that Mount Ridley Mines is showing 4 warning signs in our investment analysis, and 2 of those can't be ignored...
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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, but not derivative transactions.
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.
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