As Champion Iron Limited (ASX:CIA) hits AU$3.5b market cap, insiders may be dismayed about not purchasing higher quantities

Champion Iron Limited (ASX:CIA) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 7.7%, resulting in a AU$248m rise in the company's market capitalisation. As a result, the stock they originally bought for CA$140k is now worth CA$226k.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Champion Iron

The Last 12 Months Of Insider Transactions At Champion Iron

The Independent Non-Executive Director Gary Kenneth Lawler made the biggest insider purchase in the last 12 months. That single transaction was for AU$81k worth of shares at a price of AU$4.09 each. We do like to see buying, but this purchase was made at well below the current price of AU$6.69. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Champion Iron 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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 Champion Iron Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Champion Iron insiders own 13% of the company, currently worth about AU$456m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Champion Iron Tell Us?

It doesn't really mean much that no insider has traded Champion Iron shares in the last quarter. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Champion Iron insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for 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. Case in point: We've spotted 5 warning signs for Champion Iron you should be aware of, and 2 of them make us uncomfortable.

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, but not derivative transactions.

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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.