Great Southern Mining Limited (ASX:GSN) drops to AU$18m and insiders who purchased earlier this year lose another AU$92k

The recent 23% drop in Great Southern Mining Limited's (ASX:GSN) stock could come as a blow to insiders who purchased AU$271k worth of stock at an average buy price of AU$0.047 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$179k.

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.

Check out our latest analysis for Great Southern Mining

The Last 12 Months Of Insider Transactions At Great Southern Mining

Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Matthew Blake for AU$133k worth of shares, at about AU$0.05 per share. That means that an insider was happy to buy shares at above the current price of AU$0.031. 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. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders paid AU$271k for 5.79m shares. But they sold 300.00k shares for AU$18k. In total, Great Southern Mining insiders bought more than they sold over the last year. 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!

Great Southern Mining 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.

Great Southern Mining Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Great Southern Mining. Executive Chairman & CEO John Terpu spent AU$106k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Great Southern Mining

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Great Southern Mining insiders own about AU$9.8m worth of shares (which is 55% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Great Southern Mining Tell Us?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Great Southern Mining. Nice! While we like knowing 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. Be aware that Great Southern Mining is showing 6 warning signs in our investment analysis, and 3 of those shouldn't be ignored...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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