Bullish Terra Metals Insiders Rewarded As Their Investment Rises To AU$7.33m
Terra Metals Limited (ASX:TM1) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 22%, resulting in a AU$46m rise in the company's market capitalisation, translating to a gain of 479% on their initial investment. In other words, the original AU$1.27m purchase is now worth AU$7.33m.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Terra Metals
In the last twelve months, the biggest single purchase by an insider was when insider Kian Tat Goh bought AU$993k worth of shares at a price of AU$0.051 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.25), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Terra Metals insiders bought shares during the last year, they didn't sell. Their average price was about AU$0.043. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!
Check out our latest analysis for Terra Metals
Terra Metals 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.
Terra Metals Insiders Bought Stock Recently
It's good to see that Terra Metals insiders have made notable investments in the company's shares. Specifically, CEO, MD & Director Thomas Line bought AU$100k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.
Insider Ownership Of Terra Metals
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Terra Metals insiders own 13% of the company, worth about AU$33m. 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 Does This Data Suggest About Terra Metals Insiders?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Terra Metals 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 Terra Metals. To that end, you should learn about the 5 warning signs we've spotted with Terra Metals (including 3 which shouldn't be ignored).
Of course Terra Metals 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.