Insiders See CA$3.52m Investment In Rackla Metals Jump Last Week

Rackla Metals Inc. (CVE:RAK) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 23% resulting in a CA$17m addition to the company’s market value. In other words, the original CA$3.52m purchase is now worth CA$13.9m.

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.

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Rackla Metals Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Alejandro Gubbins Cox, sold CA$2.0m worth of shares at a price of CA$0.26 per share. That means that an insider was selling shares at slightly below the current price (CA$0.65). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 32% of Alejandro Gubbins Cox's stake. Alejandro Gubbins Cox was the only individual insider to sell over the last year. Notably Alejandro Gubbins Cox was also the biggest buyer, having purchased CA$3.5m worth of shares.

Happily, we note that in the last year insiders paid CA$3.5m for 21.36m shares. On the other hand they divested 8.00m shares, for CA$2.0m. In the last twelve months there was more buying than selling by Rackla Metals insiders. The average buy price was around CA$0.16. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. 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!

View our latest analysis for Rackla Metals

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).

Insiders At Rackla Metals Have Sold Stock Recently

There was substantially more insider selling, than buying, of Rackla Metals shares over the last three months. We note insider Alejandro Gubbins Cox cashed in CA$2.0m worth of shares. Meanwhile insiders bought CA$1.5m worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

Insider Ownership Of Rackla Metals

For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Rackla Metals insiders own 30% of the company, worth about CA$26m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Rackla Metals Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Rackla Metals, in the last three months. But we take heart from prior transactions. It's good to see insiders are shareholders. So we're not overly bothered by recent selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rackla Metals. To that end, you should learn about the 6 warning signs we've spotted with Rackla Metals (including 3 which are concerning).

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.