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Investors who take an interest in Mithril Resources Limited (ASX:MTH) should definitely note that the Company Secretary & Non-Executive Director, Adrien Wing, recently paid AU$0.018 per share to buy AU$144k worth of the stock. Although the purchase only increased their holding by 7.8%, it is still a solid purchase in our view.
Mithril Resources Insider Transactions Over The Last Year
The insider, Kenneth Baker, made the biggest insider sale in the last 12 months. That single transaction was for AU$497k worth of shares at a price of AU$0.013 each. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$0.036. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 82% of Kenneth Baker's stake. Kenneth Baker was the only individual insider to sell over the last year. Notably Kenneth Baker was also the biggest buyer, having purchased AU$753k worth of shares.
Happily, we note that in the last year insiders paid AU$753k for 60.37m shares. But insiders sold 42.78m shares worth AU$497k. Overall, Mithril Resources insiders were net buyers during the last year. The average buy price was around AU$0.012. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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. We usually like to see fairly high levels of insider ownership. Mithril Resources insiders own about AU$30m worth of shares (which is 40% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Mithril Resources Insiders?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Mithril Resources insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 4 warning signs for Mithril Resources you should be aware of, and 2 of them are a bit unpleasant.
Of course Mithril Resources 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, but not derivative transactions.
This article by Simply Wall St is general in nature. 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.
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