Insiders who purchased Rome Resources Ltd. (CVE:RMR) shares in the past 12 months are unlikely to be deeply impacted by the stock's 10.0% decline over the past week. After accounting for the recent loss, the CA$800k worth of shares they purchased is now worth CA$1.1m, suggesting a good return on their investment.
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.
Rome Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Klaus Eckhof bought CA$800k worth of shares at a price of CA$0.20 per share. Even though the purchase was made at a significantly lower price than the recent price (CA$0.27), 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.
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!
Rome Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Rome Resources Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Rome Resources, over the last three months. In total, insider Klaus Eckhof bought CA$800k worth of shares in that time. But Independent Director Michelle Robinson sold shares worth CA$28k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Rome Resources 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Rome Resources insiders own 52% of the company, currently worth about CA$5.4m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Rome Resources Insider Transactions Indicate?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Rome Resources insiders are well aligned, and quite possibly think the share price is too low. Looks promising! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Rome Resources has 3 warning signs and it would be unwise to ignore these.
But note: Rome 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.
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