Insider Buyers Lose AU$43k As Legend Mining Sheds AU$5.8m

Simply Wall St · 10/14 20:50

The recent 15% drop in Legend Mining Limited's (ASX:LEG) stock could come as a blow to insiders who purchased AU$125.7k worth of stock at an average buy price of AU$0.017 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$82.5k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Legend Mining

Legend Mining Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Mark Wilson bought AU$126k worth of shares at a price of AU$0.017 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.011). 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Mark Wilson.

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!

insider-trading-volume
ASX:LEG Insider Trading Volume October 14th 2024

Legend Mining 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 Of Legend Mining

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. Our data indicates that Legend Mining insiders own about AU$2.6m worth of shares (which is 8.2% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The Legend Mining Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Legend Mining shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Legend Mining insiders bought more shares in the company. 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. For instance, we've identified 3 warning signs for Legend Mining (2 are concerning) you should be aware of.

But note: Legend Mining may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.