As Trek Metals Limited (ASX:TKM) hits AU$28m market cap, insiders may be dismayed about not purchasing higher quantities

By
Simply Wall St
Published
February 16, 2022
ASX:TKM
Source: Shutterstock

Trek Metals Limited (ASX:TKM) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a AU$2.8m addition to the company’s market value. As a result, the stock they originally bought for AU$53k is now worth AU$59k.

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.

See our latest analysis for Trek Metals

The Last 12 Months Of Insider Transactions At Trek Metals

Notably, that recent purchase by Anthony Leibowitz is the biggest insider purchase of Trek Metals shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is AU$0.091. 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. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider bought shares at close to current prices. Anthony Leibowitz was the only individual insider to buy shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:TKM Insider Trading Volume February 16th 2022

Trek Metals is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of Trek Metals

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. Insiders own 32% of Trek Metals shares, worth about AU$9.0m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Trek Metals Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. 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 Trek Metals insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Trek Metals has 5 warning signs (and 2 which don't sit too well with us) we think you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.