Bullish Terramin Australia Insider Buying Worth AU$9.01m Yet To Pay Off
Insiders who acquired AU$9.01m worth of Terramin Australia Limited's (ASX:TZN) stock at an average price of AU$0.038 in the past 12 months may be dismayed by the recent 11% price decline. 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$3.80m.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Terramin Australia Insider Transactions Over The Last Year
The Executive Chairman Feng Sheng made the biggest insider purchase in the last 12 months. That single transaction was for AU$8.9m worth of shares at a price of AU$0.038 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.016). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. 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 237.61m shares worth AU$9.0m. But insiders sold 21.22m shares worth AU$672k. In total, Terramin Australia 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!
Check out our latest analysis for Terramin Australia
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).
Terramin Australia Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Terramin Australia shares over the last three months. In that time, insider Yang Yong dumped AU$672k worth of shares. On the flip side, Executive Director Martin Janes spent AU$19k on purchasing shares. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Terramin Australia insiders own 35% of the company, worth about AU$22m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Terramin Australia Tell Us?
Unfortunately, there has been more insider selling of Terramin Australia stock, than buying, in the last three months. In contrast, they appear keener if you look at the last twelve months. And insiders do own shares. So we're happy enough to look past some selling. 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. Every company has risks, and we've spotted 5 warning signs for Terramin Australia (of which 3 make us uncomfortable!) you should know about.
But note: Terramin Australia 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.
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