Insiders Who Purchased AU$10.00m Of Burgundy Diamond Mines Stock May Not Have Expected 13% Tumble

Insiders who bought AU$10.00m worth of Burgundy Diamond Mines Limited's (ASX:BDM) stock at an average buy price of AU$0.25 over the last year may be disappointed by the recent 13% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$6.80m, which is not great.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Burgundy Diamond Mines

The Last 12 Months Of Insider Transactions At Burgundy Diamond Mines

The Executive Chairman William O’Keeffe made the biggest insider purchase in the last 12 months. That single transaction was for AU$10.0m worth of shares at a price of AU$0.25 each. That means that even when the share price was higher than AU$0.17 (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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. William O’Keeffe was the only individual insider to buy during the last year.

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!

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.

Does Burgundy Diamond Mines 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. Burgundy Diamond Mines insiders own about AU$16m worth of shares. That equates to 6.6% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Burgundy Diamond Mines Tell Us?

It doesn't really mean much that no insider has traded Burgundy Diamond Mines shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Burgundy Diamond Mines and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Burgundy Diamond Mines has 2 warning signs (and 1 which is significant) we think you should know about.

But note: Burgundy Diamond Mines 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.