Insiders Re-Evaluate Their AU$1.01m Stock Purchase As Elementos Falls To AU$17m

The recent price decline of 25% in Elementos Limited's (ASX:ELT) stock may have disappointed insiders who bought AU$1.01m worth of shares at an average price of AU$0.17 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$496.0k, which is not great.

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.

View our latest analysis for Elementos

The Last 12 Months Of Insider Transactions At Elementos

Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Andrew Greig for AU$800k worth of shares, at about AU$0.18 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.086). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Elementos insiders may have bought shares in the last year, but they didn't sell any. 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!

Elementos is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does Elementos Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 22% of Elementos shares, worth about AU$3.7m. 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 Do The Elementos Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Elementos shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Elementos 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 Elementos has 5 warning signs (3 don't sit too well with us!) that deserve your attention before going any further with your analysis.

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.