Meeka Metals Up 12%, Insiders Still Down After AU$4.19m Purchase

Some of the losses seen by insiders who purchased AU$4.19m worth of Meeka Metals Limited (ASX:MEK) shares over the past year were recovered after the stock increased by 12% over the past week. The purchase, however, has proven to be a pricey bet, with losses currently totalling AU$872k.

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.

See our latest analysis for Meeka Metals

Meeka Metals Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Hugh Gordon bought AU$2.7m worth of shares at a price of AU$0.053 per share. That means that an insider was happy to buy shares at above the current price of AU$0.037. 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. 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. We note that Hugh Gordon was both the biggest buyer and the biggest seller.

In the last twelve months insiders purchased 89.72m shares for AU$4.2m. But insiders sold 1.17m shares worth AU$50k. Overall, Meeka Metals insiders were net buyers during the last year. They paid about AU$0.047 on average. 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Meeka Metals 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 Meeka Metals

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Meeka Metals insiders own about AU$11m worth of shares. That equates to 24% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Meeka Metals Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Meeka Metals and we see no evidence to suggest they are worried about the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Meeka Metals has 5 warning signs (3 are significant!) that deserve your attention before going any further with your analysis.

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.

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