MD & CEO of Stellar Resources Picks Up 27% More Stock

Even if it's not a huge purchase, we think it was good to see that Simon Taylor, the MD & CEO of Stellar Resources Limited (ASX:SRZ) recently shelled out AU$103k to buy stock, at AU$0.015 per share. While we're hesitant to get too excited about a purchase of that size, we do note it increased their holding by a solid 27%.

See our latest analysis for Stellar Resources

Stellar Resources Insider Transactions Over The Last Year

Notably, that recent purchase by Simon Taylor is the biggest insider purchase of Stellar Resources shares that we've seen in the last year. That implies that an insider found the current price of AU$0.016 per share to be enticing. 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 do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.

While Stellar Resources insiders bought shares during the last year, they didn't sell. They paid about AU$0.013 on average. To my mind it is good that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does Stellar Resources Boast High Insider Ownership?

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests Stellar Resources insiders own 4.9% of the company, worth about AU$1.6m. However, it's possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.

So What Do The Stellar Resources Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Stellar Resources stock. 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. At Simply Wall St, we've found that Stellar Resources has 4 warning signs (2 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

But note: Stellar 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.