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Did Consolidated Zinc Limited (ASX:CZL) Insiders Buy Up More Shares?

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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Consolidated Zinc Limited (ASX:CZL).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for Consolidated Zinc

Consolidated Zinc Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Stephen Copulos bought AU$160k worth of shares at a price of AU$0.003 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.0045), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months insiders purchased 92.94m shares for AU$333k. On the other hand they divested 8.97m shares, for AU$25k. In total, Consolidated Zinc insiders bought more than they sold over the last year. The average buy price was around AU$0.0036. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

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.

Insiders at Consolidated Zinc Have Bought Stock Recently

There has been significantly more insider buying, than selling, at Consolidated Zinc, over the last three months. Insiders spent AU$184k on shares. On the other hand, Non-Executive Chairman Andrew Richards netted AU$25k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Does Consolidated Zinc Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Consolidated Zinc insiders own about AU$2.6m worth of shares. That equates to 23% of the company. 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 Consolidated Zinc Insider Transactions Indicate?

It is good to see recent purchasing. 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. When combined with notable insider ownership, these factors suggest Consolidated Zinc insiders are well aligned, and that they may think the share price is too low. 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. Our analysis shows 5 warning signs for Consolidated Zinc (4 shouldn't be ignored!) and we strongly recommend you look at these before investing.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, 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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