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Even if it's not a huge purchase, we think it was good to see that Ian Middlemas, the Independent Non-Executive Chairman of Terra Metals Limited (ASX:TM1) recently shelled out AU$90k to buy stock, at AU$0.06 per share. That purchase might not be huge but it did increase their holding by 15%.
View our latest analysis for Terra Metals
Terra Metals Insider Transactions Over The Last Year
Notably, that recent purchase by Independent Non-Executive Chairman Ian Middlemas was not the only time they bought Terra Metals shares this year. Earlier in the year, they paid AU$0.052 per share in a AU$260k purchase. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.043). 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. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
While Terra Metals insiders bought shares during the last year, they didn't sell. Their average price was about AU$0.045. I'd consider this a positive as it suggests insiders see value at around the current 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!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Terra Metals Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Terra Metals insiders own about AU$1.9m worth of shares (which is 11% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Terra Metals Insiders?
The recent insider purchases are heartening. 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. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Terra Metals 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. At Simply Wall St, we've found that Terra Metals has 4 warning signs (3 shouldn't be ignored!) that deserve your attention before going any further with your analysis.