Bullish Rackla Metals Insiders Rewarded As Their Investment Rises To CA$2.38m

Rackla Metals Inc. (CVE:RAK) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 19%, resulting in a CA$3.2m rise in the company's market capitalisation, translating to a gain of 58% on their initial investment. Put another way, the original CA$1.50m acquisition is now worth CA$2.38m.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Rackla Metals Insider Transactions Over The Last Year

The insider Alejandro Gubbins Cox made the biggest insider purchase in the last 12 months. That single transaction was for CA$1.2m worth of shares at a price of CA$0.12 each. We do like to see buying, but this purchase was made at well below the current price of CA$0.18. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months Rackla Metals insiders were buying shares, but not selling. 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!

View our latest analysis for Rackla Metals

Rackla Metals is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Rackla Metals Have Bought Stock Recently

Over the last quarter, Rackla Metals insiders have spent a meaningful amount on shares. We can see that Chairman & CEO Simon T. Ridgway paid CA$73k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

Does Rackla Metals Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Rackla Metals insiders own about CA$5.7m worth of shares. That equates to 32% 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.

So What Does This Data Suggest About Rackla Metals Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. 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 Rackla Metals we think they are probably pretty confident of a bright 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. Every company has risks, and we've spotted 5 warning signs for Rackla Metals (of which 3 can't be ignored!) you should know about.

Of course Rackla Metals 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.