A number of insiders bought Sierra Metals Inc. (TSE:SMT) stock last year, which is great news for shareholders
Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Sierra Metals Inc. (TSE:SMT), it sends a favourable message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Sierra Metals
Sierra Metals Insider Transactions Over The Last Year
The insider Jose Vizquerra Benavides made the biggest insider purchase in the last 12 months. That single transaction was for CA$69k worth of shares at a price of CA$1.72 each. That means that an insider was happy to buy shares at above the current price of CA$0.75. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
While Sierra Metals insiders bought shares during the last year, they didn't sell. The average buy price was around CA$1.37. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and 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!
Sierra 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 Sierra Metals Have Bought Stock Recently
There was some insider buying at Sierra Metals over the last quarter. Insiders bought CA$37k worth of 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.
Does Sierra Metals Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. From our data, it seems that Sierra Metals insiders own 6.7% of the company, worth about CA$8.2m. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Sierra Metals Insiders?
Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. However, our analysis of transactions over the last year is heartening. We'd like to see bigger individual holdings. However, we don't see anything to make us think Sierra Metals insiders are doubting the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. When we did our research, we found 2 warning signs for Sierra Metals (1 doesn't sit too well with us!) that we believe deserve your full attention.
Of course Sierra 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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