Insiders At Industrial Minerals Sold AU$3.1m Of Stock Potentially Indicating Weakness

While Industrial Minerals Ltd (ASX:IND) shareholders have had a good week with the stock up 11%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell AU$3.1m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Industrial Minerals

Industrial Minerals Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Peter Gianni, sold AU$3.1m worth of shares at a price of AU$0.95 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.15. So it is hard to draw any strong conclusion from it. Peter Gianni was the only individual insider to sell over the last year.

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!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

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. We usually like to see fairly high levels of insider ownership. Industrial Minerals insiders own 46% of the company, currently worth about AU$4.8m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Industrial Minerals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Industrial Minerals shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Industrial Minerals insider transactions don't fill us with confidence. While we like knowing 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. When we did our research, we found 5 warning signs for Industrial Minerals (3 can't be ignored!) that we believe deserve your full attention.

Of course Industrial Minerals 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.