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Are Insiders Buying Champion Iron Limited (ASX:CIA) Stock?

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Champion Iron Limited (ASX:CIA).

What Is Insider Buying?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

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View our latest analysis for Champion Iron

Champion Iron Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Chairman & CEO William O’Keeffe for AU$174k worth of shares, at about AU$1.24 per share. That means that even when the share price was higher, 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. It’s not at all bad to see insiders buy shares at or above current prices.

Happily, we note that in the last year insiders bought 522.95k shares for a total of AU$658k. Overall, Champion Iron insiders were net buyers last year. Their average price was about AU$1.26. This is nice to see since it implies that insiders might see value around current prices (around AU$1.12). The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

ASX:CIA Insider Trading January 24th 19
ASX:CIA Insider Trading January 24th 19

Champion Iron is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Champion Iron Have Bought Stock Recently

It’s good to see that Champion Iron insiders have made notable investments in the company’s shares. In total, insiders bought CA$167k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.

Insider Ownership of Champion Iron

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Champion Iron insiders own 15% of the company, worth about AU$69m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Champion Iron 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. Insiders likely see value in Champion Iron shares, given these transactions (along with notable insider ownership of the company). Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Champion Iron.

Of course Champion Iron may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 editorial-team@simplywallst.com.