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Even if it's not a huge purchase, we think it was good to see that David Fitch, the Non-Executive Director of QEM Limited (ASX:QEM) recently shelled out AU$60k to buy stock, at AU$0.11 per share. Although the purchase is not a big one, increasing their shareholding by only 2.0%, it can be interpreted as a good sign.
QEM Insider Transactions Over The Last Year
In fact, the recent purchase by David Fitch was the biggest purchase of QEM shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was higher than AU$0.11 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. David Fitch was the only individual insider to buy during the last year.
David Fitch bought a total of 2.20m shares over the year at an average price of AU$0.092. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
QEM is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of QEM
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that QEM insiders own 60% of the company, worth about AU$6.6m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At QEM Tell Us?
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 QEM. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 4 warning signs (3 are significant!) that you ought to be aware of before buying any shares in QEM.
But note: QEM may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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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