Insiders Buying Toubani Resources Might Wish They Invested More, Stock Gains 12%

Last week, Toubani Resources Limited (ASX:TRE) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 12% last week, resulting in a AU$3.4m increase in the company's market worth, implying a 43% gain on their initial purchase. As a result, their original purchase of US$545.6k worth of stock is now worth US$782.2k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Toubani Resources

Toubani Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Scott Perry for AU$250k worth of shares, at about AU$0.12 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.19. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Toubani Resources insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.13. It is certainly positive to see that insiders have invested their own money 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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

Insiders At Toubani Resources Have Bought Stock Recently

Over the last quarter, Toubani Resources insiders have spent a meaningful amount on shares. Specifically, Non-Executive Chairman Scott Perry bought AU$196k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

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. It appears that Toubani Resources insiders own 15% of the company, worth about AU$4.8m. 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 Toubani Resources 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 we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Toubani Resources we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Toubani Resources. For example, Toubani Resources has 4 warning signs (and 3 which are concerning) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.