Insiders In Sierra Madre Gold and Silver Still Down 30% On US$1.53m Investment

Some of the losses seen by insiders who purchased US$1.53m worth of Sierra Madre Gold and Silver Ltd. (CVE:SM) shares over the past year were recovered after the stock increased by 10% over the past week. However, total losses seen by insiders are still US$454k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Sierra Madre Gold and Silver

Sierra Madre Gold and Silver Insider Transactions Over The Last Year

The CEO, President & Director Alexander Langer made the biggest insider purchase in the last 12 months. That single transaction was for CA$530k worth of shares at a price of CA$0.65 each. That means that even when the share price was higher than CA$0.43 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months Sierra Madre Gold and Silver insiders were buying shares, but not selling. 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!

Sierra Madre Gold and Silver 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.

Does Sierra Madre Gold and Silver Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Sierra Madre Gold and Silver insiders own about CA$5.5m worth of shares (which is 8.6% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The Sierra Madre Gold and Silver Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Sierra Madre Gold and Silver insiders bought more shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 5 warning signs for Sierra Madre Gold and Silver you should be aware of, and 3 of these are a bit concerning.

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.