Lunnon Metals Insiders Recover Some Losses, Which Stand At AU$107k

Insiders who bought AU$276.7k worth of Lunnon Metals Limited (ASX:LM8) stock in the last year have seen some of their losses recouped as the stock gained 10.0% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$107k since the time of purchase.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Lunnon Metals

Lunnon Metals Insider Transactions Over The Last Year

The MD & Director Ed Ainscough made the biggest insider purchase in the last 12 months. That single transaction was for AU$76k worth of shares at a price of AU$0.30 each. That means that an insider was happy to buy shares at above the current price of AU$0.17. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months Lunnon Metals insiders were buying shares, but not selling. The average buy price was around AU$0.27. These transactions suggest that insiders have considered the current 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!

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).

Insider Ownership Of Lunnon Metals

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Lunnon Metals insiders own about AU$3.4m worth of shares (which is 9.4% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.

So What Do The Lunnon Metals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Lunnon Metals shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Lunnon Metals insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lunnon Metals. To that end, you should learn about the 5 warning signs we've spotted with Lunnon Metals (including 1 which doesn't sit too well with us).

But note: Lunnon Metals 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.

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

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.