Last week, Waratah Minerals Limited (ASX:WTM) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 13% last week, resulting in a AU$35m increase in the company's market worth, implying a 28% gain on their initial purchase. As a result, the stock they originally bought for AU$810.4k is now worth AU$1.04m.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Waratah Minerals
The insider Stuart Tonkin made the biggest insider purchase in the last 12 months. That single transaction was for AU$810k worth of shares at a price of AU$0.60 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.77. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
See our latest analysis for Waratah Minerals
Waratah Minerals 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 Of Waratah Minerals
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Waratah Minerals insiders own about AU$16m worth of shares. That equates to 5.5% of the company. 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 Waratah Minerals Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Waratah Minerals and their transactions don't cause us concern. 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. Be aware that Waratah Minerals is showing 4 warning signs in our investment analysis, and 1 of those is a bit unpleasant...
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 of direct interests only, but not derivative transactions or indirect interests.
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