Strickland Metals Insider Buyers Pleased With AU$796k Return On Investment

Insiders who purchased Strickland Metals Limited (ASX:STK) shares in the past 12 months are unlikely to be deeply impacted by the stock's 11% decline over the past week. After taking the recent loss into consideration, the AU$1.24m worth of stock they bought is now worth AU$2.04m, indicating that their investment yielded a positive return.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Strickland Metals

Strickland Metals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by insider Shane Ball for AU$455k worth of shares, at about AU$0.05 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.098), we still think insider buying is a positive. 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.

While Strickland Metals insiders bought shares during the last year, they didn't sell. They paid about AU$0.06 on average. We don't deny that it is nice to see insiders buying stock in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!

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).

Insiders At Strickland Metals Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Strickland Metals. In total, insiders bought AU$253k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Strickland Metals insiders own about AU$46m worth of shares. That equates to 21% of the company. 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 Strickland Metals Insider Transactions Indicate?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Strickland Metals shares, given these transactions (along with notable insider ownership of the company). 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. Our analysis shows 3 warning signs for Strickland Metals (2 are significant!) and we strongly recommend you look at them before investing.

But note: Strickland Metals 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.