Magmatic Resources Insider Purchases Yet To Pay Off Regardless Of Recent Strength

Insiders who purchased AU$331.6k worth of Magmatic Resources Limited (ASX:MAG) shares over the past year recouped some of their losses after price gained 19% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$140k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, 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

In the last twelve months, the biggest single purchase by an insider was when insider Yiu Ming bought AU$272k worth of shares at a price of AU$0.13 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.044). 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. 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. On the other hand they divested 500.00k shares, for AU$45k. In the last twelve months there was more buying than selling by Magmatic Resources insiders. They paid about AU$0.076 on average. I'd consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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).

Does Magmatic Resources Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 31% of Magmatic Resources shares, worth about AU$5.6m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

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. However, our analysis of transactions over the last year is heartening. Insiders own shares in Magmatic Resources and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Magmatic Resources. Be aware that Magmatic Resources is showing 5 warning signs in our investment analysis, and 4 of those are a bit concerning...

Of course Magmatic Resources 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.