Insider Buyers Lose AU$110k As Magmatic Resources Sheds AU$2.9m

Insiders who bought AU$331.6k worth of Magmatic Resources Limited's (ASX:MAG) stock at an average buy price of AU$0.076 over the last year may be disappointed by the recent 12% decrease in the stock. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$221.6k, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Magmatic Resources

Magmatic Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Yiu Ming for AU$272k worth of shares, at about AU$0.13 per share. That means that an insider was happy to buy shares at above the current price of AU$0.051. 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. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Notably Yiu Ming was also the biggest seller.

Happily, we note that in the last year insiders paid AU$332k for 4.35m shares. But they sold 500.00k shares for AU$45k. Overall, Magmatic Resources insiders were net buyers during the last year. The average buy price was around AU$0.076. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Magmatic Resources is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Magmatic Resources

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. It appears that Magmatic Resources insiders own 30% of the company, worth about AU$6.4m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Magmatic Resources Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Magmatic Resources shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Magmatic Resources and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 4 warning signs we've spotted with Magmatic Resources (including 2 which don't sit too well with us).

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.