Insiders Who Purchased AU$4.19m Of Meeka Metals Stock May Not Have Expected 10% Tumble

The recent price decline of 10% in Meeka Metals Limited's (ASX:MEK) stock may have disappointed insiders who bought AU$4.19m worth of shares at an average price of AU$0.047 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$3.14m which is not ideal.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Meeka Metals

The Last 12 Months Of Insider Transactions At Meeka Metals

The insider Hugh Gordon made the biggest insider purchase in the last 12 months. That single transaction was for AU$2.7m worth of shares at a price of AU$0.053 each. That means that even when the share price was higher than AU$0.035 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. 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. Notably Hugh Gordon was also the biggest seller.

Over the last year, we can see that insiders have bought 89.72m shares worth AU$4.2m. But insiders sold 1.17m shares worth AU$50k. In total, Meeka Metals insiders bought more than they sold over the last year. The average buy price was around AU$0.047. These transactions suggest that insiders have considered the current price attractive. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does Meeka Metals Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 24% of Meeka Metals shares, worth about AU$10m. 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 Does This Data Suggest About Meeka Metals Insiders?

It doesn't really mean much that no insider has traded Meeka Metals shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Meeka Metals and their transactions don't cause us concern. 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 5 warning signs we've spotted with Meeka Metals (including 3 which don't sit too well with us).

Of course Meeka Metals 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.