Stellar Resources Insiders May Regret Not Buying More, Market Cap Hits AU$40m

Stellar Resources Limited (ASX:SRZ) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 19% resulting in a AU$6.2m addition to the company’s market value. In other words, the original AU$202.7k purchase is now worth AU$254.7k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Stellar Resources

In the last twelve months, the biggest single purchase by an insider was when MD & CEO Simon Taylor bought AU$103k worth of shares at a price of AU$0.015 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.019. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Stellar Resources 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Stellar Resources

Stellar Resources 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 Stellar Resources

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Stellar Resources insiders own 5.4% of the company, worth about AU$2.1m. However, it's possible that insiders might have an indirect interest through a more complex structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The Stellar Resources Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Stellar Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Stellar Resources insiders are doubting the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 3 warning signs we've spotted with Stellar Resources (including 2 which are a bit concerning).

Of course Stellar Resources 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.