Stock Analysis

How Much Are Gatos Silver, Inc. (NYSE:GATO) Insiders Spending On Buying Shares?

NYSE:GATO
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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Gatos Silver, Inc. (NYSE:GATO).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Gatos Silver

The Last 12 Months Of Insider Transactions At Gatos Silver

In the last twelve months, the biggest single purchase by an insider was when Independent Director Karl M. Hanneman bought US$97k worth of shares at a price of US$9.70 per share. So it's clear an insider wanted to buy, at around the current price, which is US$11.16. Of course they may have changed their mind. But this suggests they are optimistic. 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. In this case we're pleased to report that the insider purchases were made at close to current prices.

While Gatos Silver insiders bought shares during the last year, they didn't sell. Their average price was about US$7.63. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:GATO Insider Trading Volume January 28th 2021

Gatos Silver is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Gatos Silver Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Gatos Silver. Not only was there no selling that we can see, but they collectively bought US$326k worth of shares. That shows some optimism about the company's future.

Does Gatos Silver Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Gatos Silver insiders own 0.8% of the company, worth about US$6.1m. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Gatos Silver Insiders?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Gatos Silver insiders are expecting 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. You'd be interested to know, that we found 2 warning signs for Gatos Silver and we suggest you have a look.

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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This article by Simply Wall St is general in nature. 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.
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