Insider Buyers At QEM Likely Disappointed With 10% Slide

Insiders who acquired AU$909.0k worth of QEM Limited's (ASX:QEM) stock at an average price of AU$0.17 in the past 12 months may be dismayed by the recent 10% price decline. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$696.2k.

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.

View our latest analysis for QEM

The Last 12 Months Of Insider Transactions At QEM

The Non-Executive Director David Fitch made the biggest insider purchase in the last 12 months. That single transaction was for AU$765k worth of shares at a price of AU$0.17 each. That means that an insider was happy to buy shares at above the current price of AU$0.13. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.

QEM insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

QEM 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.

QEM Insiders Bought Stock Recently

It's good to see that QEM insiders have made notable investments in the company's shares. Overall, two insiders shelled out AU$82k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of QEM

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. QEM insiders own about AU$11m worth of shares (which is 54% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About QEM Insiders?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest QEM insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing QEM. At Simply Wall St, we've found that QEM has 5 warning signs (3 are a bit unpleasant!) that deserve your attention before going any further with your analysis.

Of course QEM 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.

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