Insiders who bought Champion Iron Limited (ASX:CIA) in the last 12 months may probably not pay attention to the stock's recent 6.5% drop. After accounting for the recent loss, the CA$232k worth of shares they purchased is now worth CA$277k, suggesting a good return on their investment.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Champion Iron

Champion Iron Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Senior Vice President of Corporate Development & Capital Markets Michael Marcotte for AU$96k worth of shares, at about AU$7.81 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$7.38). 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Champion Iron insiders bought shares during the last year, they didn't sell. They paid about AU$6.18 on average. 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 a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Champion Iron 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.

Insider Ownership Of Champion Iron

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Champion Iron insiders own 12% of the company, currently worth about AU$470m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Champion Iron Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Champion Iron shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Champion Iron insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Champion Iron has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.