We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Arizona Metals Corp. (CVE:AMC), 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, rules govern insider transactions, and certain disclosures are required.
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 Arizona Metals
Over the last year, we can see that the biggest insider sale was by the insider, Kevin Reid, for CA$118k worth of shares, at about CA$0.55 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (CA$0.28). So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Kevin Reid. Notably Kevin Reid was also the biggest buyer, having purchased CA$352k worth of shares.
Kevin Reid bought a total of 1.10m shares over the year at an average price of CA$0.32. 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!
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.
Have Arizona Metals Insiders Traded Recently?
We saw some Arizona Metals insider buying shares in the last three months. insider Kevin Reid bought CA$129k worth in that time. On the other hand, insider Kevin Reid sold CA$118k worth of shares. While it's good to see the insider buying, the net amount bought isn't enough for us to gain much confidence from it.
Does Arizona Metals Boast High 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. Insiders own 14% of Arizona Metals shares, worth about CA$2.1m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Arizona Metals Insider Transactions Indicate?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Arizona Metals stock. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Arizona Metals has 3 warning signs and it would be unwise to ignore them.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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