Collective Mining Up 11%, Insider Buyers Are Up 26%

Collective Mining Ltd. (TSE:CNL) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 11%, resulting in a CA$43m rise in the company's market capitalisation, translating to a gain of 26% on their initial investment. As a result, the stock they originally bought for US$794.9k is now worth US$1.00m.

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 Collective Mining

The Last 12 Months Of Insider Transactions At Collective Mining

The insider Pasquale DiCapo made the biggest insider purchase in the last 12 months. That single transaction was for CA$250k worth of shares at a price of CA$5.00 each. That means that an insider was happy to buy shares at around the current price of CA$5.42. That means they have been optimistic about the company in the past, though they may have changed their mind. 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. The good news for Collective Mining share holders is that insiders were buying at near the current price.

Overall, Collective Mining insiders were net buyers during the last year. They paid about CA$4.30 on average. 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. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Collective Mining Insiders Bought Stock Recently

It's good to see that Collective Mining insiders have made notable investments in the company's shares. Overall, four insiders shelled out CA$575k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Does Collective Mining Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 Collective Mining insiders own 24% of the company, worth about CA$101m. 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 Does This Data Suggest About Collective Mining Insiders?

The recent insider purchases are heartening. 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. When combined with notable insider ownership, these factors suggest Collective Mining insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 3 warning signs for Collective Mining (of which 1 makes us a bit uncomfortable!) you should know about.

But note: Collective Mining 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.