Insiders' CA$1.50m Investments In Red Following Leading Edge Materials' CA$2.3m Dip In Market Value

The recent 11% drop in Leading Edge Materials Corp.'s (CVE:LEM) stock could come as a blow to insiders who purchased CA$1.50m worth of stock at an average buy price of CA$0.10 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only CA$1.28m.

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.

View our latest analysis for Leading Edge Materials

Leading Edge Materials Insider Transactions Over The Last Year

The Director Eric Krafft made the biggest insider purchase in the last 12 months. That single transaction was for CA$1.3m worth of shares at a price of CA$0.10 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$0.085). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Eric Krafft was also the biggest seller.

Happily, we note that in the last year insiders paid CA$1.5m for 15.00m shares. On the other hand they divested 500.00k shares, for CA$50k. Overall, Leading Edge Materials insiders were net buyers during the last year. 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 always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Leading Edge Materials

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Leading Edge Materials insiders own about CA$7.7m worth of shares. That equates to 39% 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 Leading Edge Materials Tell Us?

The fact that there have been no Leading Edge Materials insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Leading Edge Materials and we see no evidence to suggest they are worried about the future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 4 warning signs for Leading Edge Materials you should be aware of, and 2 of them don't sit too well with us.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.