Insiders Re-Evaluate Their AU$1.30m Stock Purchase As Eagle Mountain Mining Falls To AU$20m

Insiders who acquired AU$1.30m worth of Eagle Mountain Mining Limited's (ASX:EM2) stock at an average price of AU$0.06 in the past 12 months may be dismayed by the recent 12% price decline. 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$1.08m, which is not great.

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.

View our latest analysis for Eagle Mountain Mining

Eagle Mountain Mining Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by MD & Executive Director Charles Bass for AU$1.2m worth of shares, at about AU$0.06 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.05). It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.

Eagle Mountain Mining 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Eagle Mountain Mining 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.

Does Eagle Mountain Mining 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Eagle Mountain Mining insiders own about AU$7.1m worth of shares. That equates to 36% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Eagle Mountain Mining Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Eagle Mountain Mining insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eagle Mountain Mining. At Simply Wall St, we've found that Eagle Mountain Mining has 3 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

But note: Eagle Mountain Mining 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com