Constellation Resources Gains 11%, Insider Trades Reap Benefit

Insiders who bought Constellation Resources Limited (ASX:CR1) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$946k as a result of the stock's 11% gain over the same period. As a result, the stock they originally bought for AU$459.8k is now worth AU$530.0k.

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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Constellation Resources Insider Transactions Over The Last Year

The insider Kevin Johnson made the biggest insider purchase in the last 12 months. That single transaction was for AU$240k worth of shares at a price of AU$0.14 each. That means that an insider was happy to buy shares at around the current price of AU$0.15. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the Constellation Resources insiders decided to buy shares at close to current prices.

In the last twelve months Constellation Resources insiders were buying shares, but not selling. 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 Constellation Resources

Constellation Resources 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.

Insiders At Constellation Resources Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Constellation Resources. insider Kevin Johnson spent AU$240k on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

Does Constellation Resources Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Constellation Resources insiders own 32% of the company, worth about AU$3.1m. 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 Constellation Resources Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Constellation Resources insiders are well aligned, and that they may think the share price is too low. 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. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Constellation Resources.

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 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.