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Last week, Velocity Minerals Ltd. (CVE:VLC) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 11% last week, resulting in a CA$2.0m increase in the company's market worth, implying a 43% gain on their initial purchase. As a result, the stock they originally bought for CA$344.4k is now worth CA$493.2k.
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 Velocity Minerals
Velocity Minerals Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Robert Kopple bought CA$226k worth of shares at a price of CA$0.10 per share. That implies that an insider found the current price of CA$0.10 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was Robert Kopple.
Robert Kopple purchased 4.93m shares over the year. The average price per share was CA$0.07. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Insider Ownership Of Velocity Minerals
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Velocity Minerals insiders own 23% of the company, worth about CA$4.5m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Velocity Minerals Insiders?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Velocity Minerals we think they are probably pretty confident of a bright future. 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. Every company has risks, and we've spotted 5 warning signs for Velocity Minerals (of which 3 are concerning!) you should know about.