Cygnus Metals Insider Confidence Rewarded, Stock Hits AU$110m Market Cap

Cygnus Metals Limited (ASX:CY5) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 13%, resulting in a AU$13m rise in the company's market capitalisation, translating to a gain of 265% on their initial investment. Put another way, the original AU$300.0k acquisition is now worth AU$1.10m.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Cygnus Metals

Cygnus Metals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Raymond Shorrocks for AU$100k worth of shares, at about AU$0.035 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.13), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Cygnus Metals 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 always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Are Cygnus Metals Insiders Buying Or Selling?

We saw some Cygnus Metals insider buying shares in the last three months. insider Michael Bohm purchased AU$10.0k worth of shares in that period. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Insider Ownership Of Cygnus Metals

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. Insiders own 14% of Cygnus Metals shares, worth about AU$15m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The Cygnus Metals Insider Transactions Indicate?

Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Cygnus Metals and their transactions don't cause us concern. 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. Be aware that Cygnus Metals is showing 6 warning signs in our investment analysis, and 4 of those are significant...

But note: Cygnus Metals 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.