Marimaca Copper Insiders May Regret Not Buying More, Market Cap Hits CA$503m

Marimaca Copper Corp. (TSE:MARI) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 12%, resulting in a CA$55m rise in the company's market capitalisation, translating to a gain of 31% on their initial investment. In other words, the original US$153.0k purchase is now worth US$200.9k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Marimaca Copper

Marimaca Copper Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Michael Haworth for CA$88k worth of shares, at about CA$3.88 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$4.95. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

While Marimaca Copper insiders bought shares during the last year, they didn't sell. 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!

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.

Marimaca Copper Insiders Bought Stock Recently

There was some insider buying at Marimaca Copper over the last quarter. Non-Executive Chairman Michael Haworth purchased CA$57k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests Marimaca Copper insiders own 0.8% of the company, worth about CA$4.1m. However, it's possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.

So What Do The Marimaca Copper Insider Transactions Indicate?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Marimaca Copper insiders are reasonably well aligned, and optimistic for the future. 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. Be aware that Marimaca Copper is showing 2 warning signs in our investment analysis, and 1 of those can't be ignored...

Of course Marimaca Copper may not be the best stock to buy. So you may wish to see this free collection of high quality 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.