We often see insiders buying up shares in companies that perform well over the long term. 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 Auteco Minerals Limited (ASX:AUT), you may well want to know whether insiders have been buying or selling.
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.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
Auteco Minerals Insider Transactions Over The Last Year
The Non-Executive Director Stephen Parsons made the biggest insider purchase in the last 12 months. That single transaction was for AU$76k worth of shares at a price of AU$0.026 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.14. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
In the last twelve months Auteco Minerals insiders were buying shares, but not selling. The average buy price was around AU$0.013. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than 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 want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 11% of Auteco Minerals shares, worth about AU$26m. 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 Auteco Minerals Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Auteco Minerals shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Auteco Minerals and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Auteco Minerals. Case in point: We've spotted 3 warning signs for Auteco Minerals you should be aware of, and 2 of them don't sit too well with us.
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. 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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