Cazaly Resources Limited's (ASX:CAZ) recent AU$1.8m market cap decline means a loss of AU$27k for insiders who bought this year

By
Simply Wall St
Published
January 25, 2022
ASX:CAZ
Source: Shutterstock

The recent price decline of 11% in Cazaly Resources Limited's (ASX:CAZ) stock may have disappointed insiders who bought AU$222k worth of shares at an average price of AU$0.047 in 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$195k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Cazaly Resources

The Last 12 Months Of Insider Transactions At Cazaly Resources

In the last twelve months, the biggest single purchase by an insider was when Acting Executive Chairman & Joint MD Clive Jones bought AU$90k worth of shares at a price of AU$0.045 per share. That means that even when the share price was higher than AU$0.041 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing 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.

In the last twelve months Cazaly Resources insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
ASX:CAZ Insider Trading Volume January 25th 2022

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders at Cazaly Resources Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Cazaly Resources. Insiders shelled out AU$49k for shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does Cazaly Resources Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Cazaly Resources insiders own about AU$5.5m worth of shares. That equates to 37% 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 Cazaly Resources Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Cazaly Resources and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cazaly Resources. Case in point: We've spotted 5 warning signs for Cazaly Resources you should be aware of, and 2 of them shouldn't be ignored.

But note: Cazaly 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, but not derivative transactions.

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