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The recent price decline of 17% in Micro-X Limited's (ASX:MX1) stock may have disappointed insiders who bought AU$100.0k worth of shares at an average price of AU$0.095 in the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$82.1k.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Micro-X
Micro-X Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Patrick O'Brien bought AU$100k worth of shares at a price of AU$0.095 per share. That means that even when the share price was higher than AU$0.078 (the recent price), an insider wanted to purchase shares. 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 encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Patrick O'Brien.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Does Micro-X Boast High Insider Ownership?
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 6.3% of Micro-X shares, worth about AU$2.9m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Micro-X Insider Transactions Indicate?
The fact that there have been no Micro-X insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Micro-X insiders are doubting the company. 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. Be aware that Micro-X is showing 4 warning signs in our investment analysis, and 2 of those are a bit unpleasant...