With stock up 7.7%, Insiders of Capricorn Metals Ltd (ASX:CMM) must be wishing they had bought more last year

By
Simply Wall St
Published
November 11, 2021
ASX:CMM
Source: Shutterstock

Capricorn Metals Ltd (ASX:CMM) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 7.7% resulting in a AU$78m addition to the company’s market value. Put another way, the original AU$73k acquisition is now worth AU$128k.

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

Check out our latest analysis for Capricorn Metals

Capricorn Metals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Executive Chairman Mark Clark for AU$73k worth of shares, at about AU$1.67 per share. We do like to see buying, but this purchase was made at well below the current price of AU$2.92. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:CMM Insider Trading Volume November 11th 2021

Capricorn Metals is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Capricorn Metals Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Capricorn Metals insiders own about AU$164m worth of shares (which is 15% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Capricorn Metals Insiders?

It doesn't really mean much that no insider has traded Capricorn Metals shares in the last quarter. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Capricorn Metals insiders think the business has merit. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 4 warning signs for Capricorn Metals (1 is a bit concerning!) and we strongly recommend you look at these before investing.

Of course Capricorn Metals may not be the best stock to buy. So you may wish to see this free collection of high quality 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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