Insiders Buying Velocity Minerals Might Wish They Invested More, Stock Gains 11%

Velocity Minerals Ltd. (CVE:VLC) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a CA$2.0m addition to the company’s market value. As a result, their original purchase of CA$344.4k worth of stock is now worth CA$493.2k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Velocity Minerals

The Last 12 Months Of Insider Transactions At Velocity Minerals

In the last twelve months, the biggest single purchase by an insider was when insider Robert Kopple bought CA$226k worth of shares at a price of CA$0.10 per share. That means that an insider was happy to buy shares at around the current price of CA$0.10. 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. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Velocity Minerals share holders is that an insider was buying at near the current price. Robert Kopple was the only individual insider to buy shares in the last twelve months.

Robert Kopple purchased 4.93m shares over the year. The average price per share was CA$0.07. 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!

Velocity Minerals 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 Velocity Minerals Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Velocity Minerals insiders own about CA$4.5m worth of shares. That equates to 23% of the company. 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 Does This Data Suggest About Velocity Minerals Insiders?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Velocity Minerals we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 5 warning signs for Velocity Minerals (of which 3 are significant!) you should know about.

But note: Velocity Minerals may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.