Cannindah Resources Up 21%, Insiders Still In The Red By AU$538k

Some of the losses seen by insiders who purchased AU$725.0k worth of Cannindah Resources Limited (ASX:CAE) shares over the past year were recovered after the stock increased by 21% over the past week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$538k since the time of purchase.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Cannindah Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Michael K. Hansel bought AU$500k worth of shares at a price of AU$1.00 per share. That means that an insider was happy to buy shares at above the current price of AU$0.034. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Cannindah Resources insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.13. I'd consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Cannindah Resources

Cannindah Resources is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Cannindah Resources

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 14% of Cannindah Resources shares, worth about AU$6.9m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About Cannindah Resources Insiders?

It doesn't really mean much that no insider has traded Cannindah Resources shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Cannindah Resources insiders are doubting the company. While it's good to be aware of 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. When we did our research, we found 4 warning signs for Cannindah Resources (3 are significant!) that we believe deserve your full attention.

But note: Cannindah 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.