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Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of M3 Mining Limited (ASX:M3M), that sends out a positive message to the company's shareholders.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for M3 Mining
M3 Mining Insider Transactions Over The Last Year
In fact, the recent purchase by Stephen Brockhurst was the biggest purchase of M3 Mining shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was higher than AU$0.045 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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 M3 Mining insiders bought shares during the last year, they didn't sell. Their average price was about AU$0.053. These transactions suggest that insiders have considered the current price attractive. 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 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).
M3 Mining Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at M3 Mining. In total, insiders bought AU$297k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Does M3 Mining 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. A high insider ownership often makes company leadership more mindful of shareholder interests. M3 Mining insiders own 40% of the company, currently worth about AU$1.1m 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 M3 Mining Insider Transactions Indicate?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest M3 Mining insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! 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 help with this, we've discovered 3 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in M3 Mining.