Sheffield Resources Insiders May Regret Not Buying More, Market Cap Hits AU$228m

Sheffield Resources Limited (ASX:SFX) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 13%, resulting in a AU$26m rise in the company's market capitalisation, translating to a gain of 18% on their initial investment. As a result, their original purchase of AU$259.6k worth of stock is now worth AU$305.7k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Sheffield Resources

Sheffield Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Lead Independent Non-Executive Director John Richards bought AU$196k worth of shares at a price of AU$0.49 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.58), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

While Sheffield Resources insiders bought shares during the last year, they didn't sell. 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!

Sheffield 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 Of Sheffield Resources

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. Insiders own 14% of Sheffield Resources shares, worth about AU$31m. 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 Sheffield Resources Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Sheffield Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Sheffield Resources and their transactions don't cause us concern. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 2 warning signs for Sheffield Resources (of which 1 makes us a bit uncomfortable!) you should know about.

But note: Sheffield 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.