Insiders' AU$4.47m Investments In Red Following Eagle Mountain Mining's AU$2.3m Dip In Market Value

The recent 25% drop in Eagle Mountain Mining Limited's (ASX:EM2) stock could come as a blow to insiders who purchased AU$4.47m worth of stock at an average buy price of AU$0.011 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$2.52m.

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.

Check out our latest analysis for Eagle Mountain Mining

Eagle Mountain Mining Insider Transactions Over The Last Year

The MD & Executive Director Charles Bass made the biggest insider purchase in the last 12 months. That single transaction was for AU$3.0m worth of shares at a price of AU$0.008 each. That means that even when the share price was higher than AU$0.006 (the recent price), an insider wanted to purchase shares. 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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Eagle Mountain Mining insiders bought shares during the last year, they didn't sell. The average buy price was around AU$0.011. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Eagle Mountain Mining is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At Eagle Mountain Mining Have Bought Stock Recently

Over the last quarter, Eagle Mountain Mining insiders have spent a meaningful amount on shares. Overall, three insiders shelled out AU$3.2m for shares in the company -- and none sold. That shows some optimism about the company's future.

Does Eagle Mountain Mining Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Eagle Mountain Mining insiders own 48% of the company, worth about AU$3.3m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Eagle Mountain Mining Tell Us?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Eagle Mountain Mining. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eagle Mountain Mining. Our analysis shows 6 warning signs for Eagle Mountain Mining (5 are a bit concerning!) and we strongly recommend you look at these before investing.

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.