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Vital Metals Limited (ASX:VML) Insiders Increased Their Holdings

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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Vital Metals Limited (ASX:VML), you may well want to know whether insiders have been buying or selling.

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, most countries require that the company discloses such transactions to the market.

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We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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.'

View our latest analysis for Vital Metals

Vital Metals Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Executive Director Phillip Coulson bought AU$941k worth of shares at a price of AU$0.0089 per share. That implies that an insider found the current price of AU$0.01 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.

In the last twelve months insiders paid AU$1.3m for 161.7m shares purchased. Vital Metals may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

ASX:VML Recent Insider Trading, June 14th 2019
ASX:VML Recent Insider Trading, June 14th 2019

Vital Metals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Vital Metals Have Bought Stock Recently

There was some insider buying at Vital Metals over the last quarter. Insiders shelled out AU$45k for shares in that time. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Vital Metals insiders own 18% of the company, worth about AU$3.2m. 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 Vital Metals Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Vital Metals insiders are doubting the company, and they do own shares. Along with insider transactions, I recommend checking if Vital Metals is growing revenue. This free chart of historic revenue and earnings should make that easy.

Of course Vital Metals 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.