Having purchased CA$1.2m worth of Southern Arc Minerals Inc. (CVE:SA.H) stock, the recent 12% pullback is not what insiders may have expected

By
Simply Wall St
Published
September 08, 2021
TSXV:SA.H
Source: Shutterstock

The recent price decline of 12% in Southern Arc Minerals Inc.'s (CVE:SA.H) stock may have disappointed insiders who bought CA$1.2m worth of shares at an average price of CA$0.89 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CA$203k which is not ideal.

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.

Check out our latest analysis for Southern Arc Minerals

The Last 12 Months Of Insider Transactions At Southern Arc Minerals

Over the last year, we can see that the biggest insider purchase was by Executive Chairman & CEO John Proust for CA$1.2m worth of shares, at about CA$0.89 per share. That means that even when the share price was higher than CA$0.15 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. John Proust was the only individual insider to buy shares in the last twelve months. Notably John Proust was also the biggest seller.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
TSXV:SA.H Insider Trading Volume September 9th 2021

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Southern Arc Minerals insiders own 45% of the company, worth about CA$1.6m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Southern Arc Minerals Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Southern Arc Minerals insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Southern Arc Minerals. Case in point: We've spotted 5 warning signs for Southern Arc Minerals you should be aware of, and 4 of them can't be ignored.

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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