Stock Analysis

Great Southern Mining Limited (ASX:GSN) Insiders Increased Their Holdings

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ASX:GSN
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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Great Southern Mining Limited (ASX:GSN), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Great Southern Mining

Great Southern Mining Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Davide Bosio bought AU$769k worth of shares at a price of AU$0.087 per share. That means that an insider was happy to buy shares at around the current price of AU$0.097. 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. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Great Southern Mining insiders decided to buy shares at close to current prices.

In the last twelve months Great Southern Mining insiders were buying shares, but not selling. Their average price was about AU$0.045. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:GSN Insider Trading Volume January 11th 2021

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Great Southern Mining

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Great Southern Mining insiders own 50% of the company, worth about AU$22m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Great Southern Mining Insiders?

It doesn't really mean much that no insider has traded Great Southern Mining shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Great Southern Mining insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Great Southern Mining. Our analysis shows 5 warning signs for Great Southern Mining (2 don't sit too well with us!) and we strongly recommend you look at these before investing.

Of course Great Southern Mining 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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