The recent 20% drop in Canyon Resources Limited's (ASX:CAY) stock could come as a blow to insiders who purchased AU$542k worth of stock at an average buy price of AU$0.08 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$291k, which is not what they expected.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Canyon Resources Insider Transactions Over The Last Year
The Independent Director Wei Su made the biggest insider purchase in the last 12 months. That single transaction was for AU$542k worth of shares at a price of AU$0.08 each. That means that even when the share price was higher than AU$0.043 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Wei Su was the only individual insider to buy during the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Canyon 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.
Insider Ownership of Canyon Resources
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. Canyon Resources insiders own about AU$5.9m worth of shares. That equates to 17% 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 Does This Data Suggest About Canyon Resources Insiders?
It doesn't really mean much that no insider has traded Canyon Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Canyon Resources and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Canyon Resources. Our analysis shows 6 warning signs for Canyon Resources (3 are a bit concerning!) and we strongly recommend you look at them before investing.
But note: Canyon 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.
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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.