Insiders who purchased CA$1.60m worth of Sorrento Resources Ltd. (CSE:SRS) shares over the past year recouped some of their losses after price gained 14% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CA$798k.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Sorrento Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$800k worth of shares at a price of CA$0.25 per share. That means that even when the share price was higher than CA$0.13 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
While Sorrento Resources insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Check out our latest analysis for Sorrento Resources
Sorrento Resources is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 24% of Sorrento Resources shares, worth about CA$1.8m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Sorrento Resources Tell Us?
It doesn't really mean much that no insider has traded Sorrento Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Sorrento Resources and we see no evidence to suggest they are worried about the future. 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. At Simply Wall St, we found 5 warning signs for Sorrento Resources that deserve your attention before buying any shares.
But note: Sorrento Resources 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 of direct interests only, but not derivative transactions or indirect interests.
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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.