It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Marvel Gold Limited’s (ASX:MVL) case, it’s fantastic news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
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In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Stephen Dennis bought AU$500k worth of shares at a price of AU$0.08 per share. That means that even when the share price was higher than AU$0.016 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Marvel Gold insiders may have bought shares in the last year, but they didn’t sell any. Their average price was about AU$0.052. These transactions suggest that insiders have considered the current price attractive. 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 Marvel Gold
Marvel Gold 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.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. From our data, it seems that Marvel Gold insiders own 8.4% of the company, worth about AU$1.9m. However, it’s possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.
The fact that there have been no Marvel Gold insider transactions recently certainly doesn’t bother us. 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 Marvel Gold 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. Case in point: We’ve spotted 4 warning signs for Marvel Gold you should be aware of, and 2 of these can’t be ignored.