Terra Metals Insiders Enjoying AU$1.9m Appreciation On AU$1.18m Investment

Terra Metals Limited (ASX:TM1) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 14% resulting in a AU$6.9m addition to the company’s market value. In other words, the original AU$1.18m purchase is now worth AU$3.10m.

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

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Terra Metals Insider Transactions Over The Last Year

The insider Kian Tat Goh made the biggest insider purchase in the last 12 months. That single transaction was for AU$993k worth of shares at a price of AU$0.051 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.10. 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.

Terra Metals insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.04. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Terra Metals

Terra Metals is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Terra Metals Insiders Bought Stock Recently

It's good to see that Terra Metals insiders have made notable investments in the company's shares. We can see that insider Kian Tat Goh paid AU$1.2m for shares in the company. No-one sold. That shows some optimism about the company's future.

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. Insiders own 13% of Terra Metals shares, worth about AU$7.4m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The Terra Metals 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 Terra Metals stock. 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, Terra Metals has 4 warning signs (and 2 which shouldn't be ignored) 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 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.