Favourable Signals For Middle Island Resources: Numerous Insiders Acquired Stock

It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Middle Island Resources Limited's (ASX:MDI) case, it's fantastic news for shareholders.

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.

See our latest analysis for Middle Island Resources

Middle Island Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Stephen Copulos bought AU$161k worth of shares at a price of AU$0.015 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.017), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid AU$255k for 14.90m shares. On the other hand they divested 750.00k shares, for AU$19k. Overall, Middle Island Resources insiders were net buyers during the last year. The average buy price was around AU$0.017. 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

Middle Island Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Middle Island Resources insiders own about AU$793k worth of shares. That equates to 21% of the company. 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 Middle Island Resources Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders own shares in Middle Island 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. For example, Middle Island Resources has 5 warning signs (and 4 which are a bit concerning) we think you should know about.

But note: Middle Island Resources 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.

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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.