Summa Silver Insiders CA$1.3m Short Of Breakeven On Stock Purchase

Insiders who bought CA$3.04m worth of Summa Silver Corp. (CVE:SSVR) stock in the last year have seen some of their losses recouped as the stock gained 12% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at CA$1.3m 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 Summa Silver

Summa Silver Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$3.0m worth of shares at a price of CA$0.80 per share. That means that even when the share price was higher than CA$0.47 (the recent price), an insider wanted to purchase shares. 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. 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 Summa 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!

Summa Silver is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Summa 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. It appears that Summa Silver insiders own 22% of the company, worth about CA$10m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Summa Silver Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Summa Silver shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Summa Silver and their transactions don't cause us concern. While we like knowing 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. For example, Summa Silver has 4 warning signs (and 2 which make us uncomfortable) we think you should know about.

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.