Insiders of Great Southern Mining Getting Good Value On Their AU$1.35m Investment

Insiders who bought Great Southern Mining Limited (ASX:GSN) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$3.0m as a result of the stock's 11% gain over the same period. In other words, the original AU$1.35m purchase is now worth AU$2.07m.

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.

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Great Southern Mining Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Joseph Pinto for AU$759k worth of shares, at about AU$0.036 per share. That means that an insider was happy to buy shares at above the current price of AU$0.031. 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. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Joseph Pinto was the only individual insider to buy during the last year. Notably Joseph Pinto was also the biggest seller.

Joseph Pinto bought 66.83m shares over the last 12 months at an average price of AU$0.02. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Great Southern Mining

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders At Great Southern Mining Have Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Great Southern Mining. insider Joseph Pinto spent AU$340k on stock. But insider Joseph Pinto sold shares worth AU$1.4k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Great Southern Mining insiders own 45% of the company, worth about AU$14m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Great Southern Mining Insider Transactions Indicate?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Great Southern Mining. Looks promising! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For instance, we've identified 4 warning signs for Great Southern Mining (2 are a bit unpleasant) you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.