Several Insiders Invested In Sheffield Resources Flagging Positive News
When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Sheffield Resources Limited's (ASX:SFX) instance, it's good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Sheffield Resources
The Last 12 Months Of Insider Transactions At Sheffield Resources
Over the last year, we can see that the biggest insider purchase was by Lead Independent Non-Executive Director John Richards for AU$196k worth of shares, at about AU$0.49 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$0.54. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Sheffield Resources insiders decided to buy shares at close to current prices.
Sheffield Resources insiders may have bought shares in the last year, but they didn't sell any. 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!
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.
Does Sheffield 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. Insiders own 14% of Sheffield Resources shares, worth about AU$29m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Sheffield Resources Insiders?
It doesn't really mean much that no insider has traded Sheffield Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Sheffield Resources and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Sheffield Resources has 2 warning signs (and 1 which is concerning) we think you should know about.
But note: Sheffield 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 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.
