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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Emerald Resources NL (ASX:EMR).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Emerald Resources
In the last twelve months, the biggest single purchase by an insider was when insider Ryan Lee bought AU$141k worth of shares at a price of AU$0.78 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.98. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Emerald Resources insiders may have bought shares in the last year, but they didn't sell any. 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!
Emerald Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Emerald Resources Insiders Bought Stock Recently
It's good to see that Emerald Resources insiders have made notable investments in the company's shares. insider Ryan Lee spent AU$141k on stock, and there wasn't any selling. That shows some optimism about the company's future.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 23% of Emerald Resources shares, worth about AU$110m. 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 Emerald Resources Insider Transactions Indicate?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Emerald Resources. That's what I like to see! While we like knowing 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. When we did our research, we found 4 warning signs for Emerald Resources (2 are a bit unpleasant!) that we believe deserve your full attention.
Of course Emerald Resources may not be the best stock to buy. So you may wish to see this free collection of high quality 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. 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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