GBM Resources Reaches AU$163m Market Cap Benefiting Insider Stock Buying

GBM Resources Limited (ASX:GBZ) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 24%, resulting in a AU$31m rise in the company's market capitalisation, translating to a gain of 600% on their initial investment. As a result, the stock they originally bought for AU$120.0k is now worth AU$840.0k.

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.

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The Last 12 Months Of Insider Transactions At GBM Resources

The Executive Director Andrew Krelle made the biggest insider purchase in the last 12 months. That single transaction was for AU$120k worth of shares at a price of AU$0.006 each. Even though the purchase was made at a significantly lower price than the recent price (AU$0.042), 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.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for GBM Resources

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

Insider Ownership Of GBM Resources

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. GBM Resources insiders own about AU$20m worth of shares. That equates to 12% 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.

What Might The Insider Transactions At GBM Resources Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in GBM Resources shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing GBM Resources. While conducting our analysis, we found that GBM Resources has 3 warning signs and it would be unwise to ignore these.

Of course GBM Resources 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 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.