Clara Resources Australia Insiders Lose Out As Stock Sinks To AU$0.004

The recent 20% drop in Clara Resources Australia Ltd's (ASX:C7A) stock could come as a blow to insiders who purchased AU$408.9k worth of stock at an average buy price of AU$0.0096 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$169.9k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Our free stock report includes 5 warning signs investors should be aware of before investing in Clara Resources Australia. Read for free now.

The Last 12 Months Of Insider Transactions At Clara Resources Australia

The insider Fred Bart made the biggest insider purchase in the last 12 months. That single transaction was for AU$175k worth of shares at a price of AU$0.014 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.004). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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.

Clara Resources Australia insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.0096. This is nice to see since it implies that insiders might see value around 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!

Check out our latest analysis for Clara Resources Australia

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Clara Resources Australia Insiders Bought Stock Recently

It's good to see that Clara Resources Australia insiders have made notable investments in the company's shares. In total, insiders bought AU$145k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership

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. It appears that Clara Resources Australia insiders own 32% of the company, worth about AU$624k. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Clara Resources Australia Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Clara Resources Australia we think they are probably pretty confident of a bright 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. At Simply Wall St, we found 5 warning signs for Clara Resources Australia that deserve your attention before buying any shares.

But note: Clara Resources Australia 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.