Read This Before Selling Terrain Minerals Limited (ASX:TMX) Shares

It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Terrain Minerals Limited (ASX:TMX).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for Terrain Minerals

Terrain Minerals Insider Transactions Over The Last Year

The Independent Non-Executive Director Johannes Lin made the biggest insider purchase in the last 12 months. That single transaction was for AU$398k worth of shares at a price of AU$0.014 each. So it's clear an insider wanted to buy, at around the current price, which is AU$0.016. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices.

Over the last year, we can see that insiders have bought 30.41m shares worth AU$428k. But they sold 3.40m shares for AU$57k. Overall, Terrain Minerals insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Terrain Minerals Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Terrain Minerals. In fact, two insiders bought AU$428k worth of shares. But we did see insider Keng Lim sell shares worth AU$57k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership of Terrain Minerals

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 33% of Terrain Minerals shares, worth about AU$3.8m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Terrain Minerals Insiders?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Terrain Minerals shares, given these transactions (along with notable insider ownership of the company). So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Terrain Minerals has 5 warning signs (and 2 which are significant) we think you should know about.

Of course Terrain Minerals may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

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. 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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