Despite Fredonia Mining's Pullback, Insiders Still Gained US$43k

Simply Wall St · 10/18 11:48

Insiders who bought Fredonia Mining Inc. (CVE:FRED) stock lover the last 12 months are probably not as affected by last week’s 10.0% loss. Reason being, despite the recent loss, insiders original purchase value of US$372.5k is now worth US$415.8k.

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.

View our latest analysis for Fredonia Mining

Fredonia Mining Insider Transactions Over The Last Year

The President & Director Ricardo Auriemma made the biggest insider purchase in the last 12 months. That single transaction was for CA$134k worth of shares at a price of CA$0.05 each. That means that even when the share price was higher than CA$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. To us, it's very important to consider the price insiders pay for 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.

In the last twelve months Fredonia Mining insiders were buying shares, but not selling. They paid about CA$0.04 on average. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. 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!

insider-trading-volume
TSXV:FRED Insider Trading Volume October 18th 2024

Fredonia 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.

Fredonia Mining Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Fredonia Mining. Overall, three insiders shelled out CA$128k for shares in the company -- and none sold. This makes one think the business has some good points.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Fredonia Mining insiders own 26% of the company, worth about CA$2.6m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Fredonia Mining Insider Transactions Indicate?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Fredonia Mining shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Fredonia Mining. Case in point: We've spotted 6 warning signs for Fredonia Mining you should be aware of, and 5 of these are potentially serious.

Of course Fredonia Mining may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.