How Much Are E2 Metals Limited (ASX:E2M) Insiders Spending On Buying Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell E2 Metals Limited (ASX:E2M), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for E2 Metals

E2 Metals Insider Transactions Over The Last Year

The insider Martin Donohue made the biggest insider purchase in the last 12 months. That single transaction was for AU$250k worth of shares at a price of AU$0.15 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.57. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months insiders purchased 2.19m shares for AU$292k. But insiders sold 312.17k shares worth AU$14k. In total, E2 Metals insiders bought more than they sold over the last year. Their average price was about AU$0.13. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

E2 Metals Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at E2 Metals. insider Gregory Seers purchased AU$27k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership of E2 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that E2 Metals insiders own about AU$12m worth of shares (which is 14% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At E2 Metals Tell Us?

Insider selling has just outweighed insider buying in the last three months. But the net divestment is not enough to concern us at all. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in E2 Metals and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that E2 Metals has 6 warning signs (3 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

Of course E2 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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This article by Simply Wall St is general in nature. 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.
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