Favorable Signals for M3 Mining: Several insiders have acquired the stock

Normally, when an insider buys shares, it may not be a huge event. But when many insiders buy as they did in the case of… M3 Mining Company Limited (Australian Stock Exchange:M3M), which sends a positive message to the company’s shareholders.

Although we don’t think shareholders should simply follow insider transactions, we do think it makes perfect sense to keep an eye on what insiders are doing.

View our latest analysis for M3 Mining

In the last twelve months, the largest single purchase by an insider was when insider Stephen Brookhurst bought AU$285k worth of shares at a price of AU$0.069 per share. So it’s clear that an insider wanted to buy, even at a higher price than the current share price (AU$0.038). It’s very possible that they regret the purchase, but they’re more likely to be bullish on the company. For us, it’s very important to consider the price insiders are paying for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they view the stock as good value, even at a higher price.

While M3 Mining insiders bought shares over the last year, they didn’t sell. The average purchase price was around A$0.051. I would consider this a positive because it suggests that insiders see value at roughly the current price. You can see insider transactions (by companies and individuals) over the past year as shown in the chart below. If you click on the chart, you can see all the individual transactions, including the stock price, individual transactions and history!

There are always a lot of shares being bought by insiders. If investing in lesser-known companies is more your style, you can take a look at this free List of companies. (Hint: Insiders have been buying it.)

Over the past three months, we’ve seen a bit of insider buying at M3 Mining. CEO Simon Eley bought shares worth A$25,000 at the time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months is also not enough for us to put much weight on it as a single factor.

Another way to test the alignment between company leaders and other shareholders is to look at how many shares they own. I think it’s a good sign if insiders own a large number of shares in the company. M3 Mining insiders appear to own 37% of the company, worth about AU$1.1m. While this is a strong but not outstanding level of insider ownership, it is enough to indicate some alignment between management and small shareholders.

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