Shareholders May Not Overlook Waratah Minerals Insiders Selling AU$3.6m In Stock

Despite the fact that Waratah Minerals Limited (ASX:WTM) stock rose 23% last week, insiders who sold AU$3.6m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of AU$0.30, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Waratah Minerals

Waratah Minerals Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Timothy Rupert Goyder, sold AU$2.9m worth of shares at a price of AU$0.30 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.18. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Timothy Rupert Goyder. Notably Timothy Rupert Goyder was also the biggest buyer, having purchased AU$240k worth of shares.

Over the last year, we can see that insiders have bought 2.35m shares worth AU$240k. But they sold 11.93m shares for AU$3.6m. Timothy Rupert Goyder sold a total of 11.93m shares over the year at an average price of AU$0.30. 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!

I will like Waratah Minerals better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership Of Waratah Minerals

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Waratah Minerals insiders own about AU$2.8m worth of shares (which is 7.4% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.

So What Do The Waratah Minerals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Waratah Minerals shares in the last quarter. Our analysis of Waratah Minerals insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Waratah Minerals (of which 2 are concerning!) you should know about.

But note: Waratah Minerals 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.