Insiders Buying Newtopia Might Wish They Invested More, Stock Gains 36%

Newtopia Inc. (CVE:NEWU) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 36%, resulting in a CA$4.3m rise in the company's market capitalisation, translating to a gain of 13% on their initial investment. As a result, the stock they originally bought for CA$332.0k is now worth CA$376.1k.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Newtopia

Newtopia Insider Transactions Over The Last Year

In fact, the recent purchase by Independent Director Roger Poirier was not their only acquisition of Newtopia shares this year. They previously made an even bigger purchase of CA$200k worth of shares at a price of CA$0.07 per share. That means that an insider was happy to buy shares at around the current price of CA$0.075. 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. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Newtopia insiders decided to buy shares at close to current prices.

In the last twelve months Newtopia insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Newtopia is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders At Newtopia Have Bought Stock Recently

There was some insider buying at Newtopia over the last quarter. Insiders shelled out CA$31k for shares in that time. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does Newtopia Boast High Insider Ownership?

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. It appears that Newtopia insiders own 30% of the company, worth about CA$3.9m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Newtopia Insider Transactions Indicate?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Newtopia and we see no evidence to suggest they are worried about the future. 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, Newtopia 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.