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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in TerraCom Limited's (ASX:TER) case, it's fantastic news for shareholders.
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 TerraCom
The Last 12 Months Of Insider Transactions At TerraCom
Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Mark Lochtenberg for AU$353k worth of shares, at about AU$0.18 per share. That means that an insider was happy to buy shares at above the current price of AU$0.17. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing 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 TerraCom insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
TerraCom is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
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. Insiders own 9.1% of TerraCom shares, worth about AU$13m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About TerraCom Insiders?
The fact that there have been no TerraCom insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in TerraCom and their transactions don't cause us concern. 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. At Simply Wall St, we've found that TerraCom has 4 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.