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Even if it's not a huge purchase, we think it was good to see that Brian McMaster, the Non-Executive Director of Valor Resources Limited (ASX:VAL) recently shelled out AU$100k to buy stock, at AU$0.0019 per share. While that isn't the hugest buy, it actually boosted their shareholding by 51%, which is good to see.
Valor Resources Insider Transactions Over The Last Year
In fact, the recent purchase by Non-Executive Director Brian McMaster was not their only acquisition of Valor Resources shares this year. Earlier in the year, they paid AU$0.007 per share in a AU$212k purchase. That means that an insider was happy to buy shares at around the current price of AU$0.007. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Valor Resources share holders is that insiders were buying at near the current price.
Valor Resources insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.0036. To my mind it is good 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Valor Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Valor Resources Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Valor Resources insiders own 16% of the company, worth about AU$2.2m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Valor Resources Tell Us?
The recent insider purchases are heartening. And the longer term insider transactions also give 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 Valor Resources insiders are well aligned, and that they may think the share price is too low. While we like knowing 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. For example, Valor Resources has 4 warning signs (and 2 which are concerning) we think you should know about.
But note: Valor Resources 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, 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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