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Should You Be Worried About Insider Transactions At AVZ Minerals Limited (ASX:AVZ)?

Simply Wall St

We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell AVZ Minerals Limited (ASX:AVZ), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.'

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View our latest analysis for AVZ Minerals

AVZ Minerals Insider Transactions Over The Last Year

The , Klaus Eckhof, made the biggest insider sale in the last 12 months. That single transaction was for AU$2.9m worth of shares at a price of AU$0.14 each. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.045. So it may not tell us anything about how insiders feel about the current share price. Klaus Eckhof was the only individual insider to sell over the last year.

In the last twelve months insiders purchased 1.2m shares for AU$82k. But insiders sold 32.5m shares worth AU$4.5m. Klaus Eckhof ditched 32.5m shares over the year. The average price per share was AU$0.14. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

ASX:AVZ Recent Insider Trading, May 24th 2019

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Insider Ownership of AVZ Minerals

For a common shareholder, it is worth checking how many shares are held by company 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 AVZ Minerals insiders own 9.6% of the company, worth about AU$11m. 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.

So What Do The AVZ Minerals Insider Transactions Indicate?

It doesn't really mean much that no insider has traded AVZ Minerals shares in the last quarter. Our analysis of AVZ Minerals insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. Along with insider transactions, I recommend checking if AVZ Minerals is growing revenue. This free chart of historic revenue and earnings should make that easy.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.