Stock Analysis

Have Insiders Been Buying Montem Resources Limited (ASX:MR1) Shares?

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ASX:MR1
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Montem Resources Limited (ASX:MR1).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

See our latest analysis for Montem Resources

Montem Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Aliro Olave bought AU$358k worth of shares at a price of AU$0.25 per share. That means that an insider was happy to buy shares at above the current price of AU$0.23. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.

In the last twelve months Montem Resources insiders were buying shares, but not selling. Their average price was about AU$0.18. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:MR1 Insider Trading Volume December 16th 2020

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does Montem Resources 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. Montem Resources insiders own about AU$11m worth of shares. That equates to 23% of the company. 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 Montem Resources Insider Transactions Indicate?

The fact that there have been no Montem Resources insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders own shares in Montem Resources and we see no evidence to suggest they are worried about the future. While we like knowing 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. Case in point: We've spotted 5 warning signs for Montem Resources you should be aware of, and 3 of them shouldn't be ignored.

But note: Montem 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, but not derivative transactions.

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