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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Cygnus Metals Limited (ASX:CY5), it sends a favourable message to the company's shareholders.
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.
Check out our latest analysis for Cygnus Metals
The Last 12 Months Of Insider Transactions At Cygnus Metals
In fact, the recent purchase by Non-Executive Director Raymond Shorrocks was not their only trade of Cygnus Metals shares this year. Earlier in the year, they sold shares at a price ofAU$0.13 per share in a -AU$202k transaction. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.068. So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid AU$290k for 8.29m shares. But insiders sold 1.55m shares worth AU$202k. Overall, Cygnus Metals insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Cygnus Metals 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.
Insiders At Cygnus Metals Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Cygnus Metals. Not only was there no selling that we can see, but they collectively bought AU$290k worth of shares. This makes one think the business has some good points.
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. We usually like to see fairly high levels of insider ownership. It appears that Cygnus Metals insiders own 26% of the company, worth about AU$6.5m. 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 Cygnus Metals Insider Transactions Indicate?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Cygnus Metals we think they are probably pretty confident of a bright future. While it's good to be aware of 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. To that end, you should learn about the 6 warning signs we've spotted with Cygnus Metals (including 2 which shouldn't be ignored).