Insider Buyers Lose Additional US$38k As Lucara Diamond Dips To CA$138m

Insiders who bought US$162.9k worth of Lucara Diamond Corp.'s (TSE:LUC) stock at an average buy price of US$0.39 over the last year may be disappointed by the recent 12% decrease in the stock. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$124.8k which is not ideal.

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.

Check out our latest analysis for Lucara Diamond

Lucara Diamond Insider Transactions Over The Last Year

The President William Lamb made the biggest insider purchase in the last 12 months. That single transaction was for CA$99k worth of shares at a price of CA$0.44 each. That means that even when the share price was higher than CA$0.30 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. William Lamb was the only individual insider to buy during the last year.

William Lamb bought 416.00k shares over the last 12 months at an average price of CA$0.39. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

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. I reckon it's a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own CA$4.0m worth of Lucara Diamond stock, about 2.9% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.

So What Do The Lucara Diamond Insider Transactions Indicate?

It is good 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 Lucara Diamond stock. 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. In terms of investment risks, we've identified 2 warning signs with Lucara Diamond and understanding them should be part of your investment process.

But note: Lucara Diamond 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.