Some of the losses seen by insiders who purchased AU$728.3k worth of Resource Mining Corporation Limited (ASX:RMI) shares over the past year were recovered after the stock increased by 85% over the past week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$189k since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Resource Mining
The Last 12 Months Of Insider Transactions At Resource Mining
The Executive Chairman Asimwe Matungwa Kabunga made the biggest insider purchase in the last 12 months. That single transaction was for AU$500k worth of shares at a price of AU$0.05 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.037). 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. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Resource Mining insiders were buying shares, but not selling. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Resource Mining insiders own 48% of the company, worth about AU$10m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Resource Mining Tell Us?
It doesn't really mean much that no insider has traded Resource Mining shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Resource Mining insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the 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. For instance, we've identified 6 warning signs for Resource Mining (4 are concerning) you should be aware of.