Canadian Phosphate Reaches AU$23m Market Cap Benefiting Insider Stock Buying

Canadian Phosphate Limited (ASX:CP8) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 17%, resulting in a AU$3.4m rise in the company's market capitalisation, translating to a gain of 241% on their initial investment. In other words, the original AU$110.0k purchase is now worth AU$375.0k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Canadian Phosphate

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman Stuart Richardson bought AU$110k worth of shares at a price of AU$0.022 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.075. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

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!

View our latest analysis for Canadian Phosphate

Canadian Phosphate is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Canadian Phosphate

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. We usually like to see fairly high levels of insider ownership. Canadian Phosphate insiders own about AU$6.1m worth of shares. That equates to 27% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Canadian Phosphate Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Canadian Phosphate insiders are doubting the company, and they do own shares. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 6 warning signs for Canadian Phosphate (of which 3 are a bit unpleasant!) you should know about.

Of course Canadian Phosphate 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 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.