With Castile Resources Up 28%, Insider Buyers Count Their Returns

Castile Resources Limited (ASX:CST) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 28%, resulting in a AU$6.7m rise in the company's market capitalisation, translating to a gain of 54% on their initial investment. As a result, their original purchase of AU$375.0k worth of stock is now worth AU$576.9k.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Castile Resources

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Chairman Peter Cook for AU$275k worth of shares, at about AU$0.065 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.10. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Castile Resources insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Castile Resources

Castile 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.

Insider Ownership Of Castile Resources

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. Insiders own 24% of Castile Resources shares, worth about AU$7.4m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Castile Resources Tell Us?

It doesn't really mean much that no insider has traded Castile Resources shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Castile Resources and their transactions don't cause us concern. 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 help with this, we've discovered 4 warning signs (2 are concerning!) that you ought to be aware of before buying any shares in Castile Resources.

But note: Castile 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 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.