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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Quantum Graphite Limited's (ASX:QGL) instance, it's good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Quantum Graphite
The Last 12 Months Of Insider Transactions At Quantum Graphite
In the last twelve months, the biggest single purchase by an insider was when insider Salvatore Catalano bought AU$704k worth of shares at a price of AU$0.55 per share. That means that even when the share price was higher than AU$0.53 (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. 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.
Over the last year, we can see that insiders have bought 2.82m shares worth AU$1.6m. But they sold 1.16m shares for AU$598k. In total, Quantum Graphite insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
Insider Ownership Of Quantum Graphite
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Quantum Graphite insiders own 27% of the company, worth about AU$50m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Quantum Graphite Tell Us?
The fact that there have been no Quantum Graphite insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Quantum Graphite insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Quantum Graphite. At Simply Wall St, we've found that Quantum Graphite has 3 warning signs (2 are significant!) that deserve your attention before going any further with your analysis.