Finlay Minerals Ltd.'s (CVE:FYL) recent CA$3.1m market cap decline means a loss of CA$40k for insiders who bought this year

By
Simply Wall St
Published
November 19, 2021
TSXV:FYL
Source: Shutterstock

The recent 21% drop in Finlay Minerals Ltd.'s (CVE:FYL) stock could come as a blow to insiders who purchased CA$150k worth of stock at an average buy price of CA$0.13 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth CA$110k, which is not what they expected.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Finlay Minerals

The Last 12 Months Of Insider Transactions At Finlay Minerals

In fact, the recent purchase by John Barakso was the biggest purchase of Finlay Minerals shares made by an insider individual in the last twelve months, according to our records. That means that an insider was happy to buy shares at above the current price of CA$0.095. 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. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was John Barakso.

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!

insider-trading-volume
TSXV:FYL Insider Trading Volume November 20th 2021

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

Does Finlay Minerals Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Finlay Minerals insiders own about CA$1.9m worth of shares. That equates to 16% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Finlay Minerals Tell Us?

It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of Finlay Minerals we think they are probably pretty confident of a bright 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. To help with this, we've discovered 4 warning signs (2 don't sit too well with us!) that you ought to be aware of before buying any shares in Finlay Minerals.

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, but not derivative transactions.

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