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Some of the losses seen by insiders who purchased CA$120.7k worth of Kobo Resources Inc. (CVE:KRI) shares over the past year were recovered after the stock increased by 13% over the past week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at CA$31k since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Kobo Resources
The Last 12 Months Of Insider Transactions At Kobo Resources
The Independent Director Patrick Gagnon made the biggest insider purchase in the last 12 months. That single transaction was for CA$67k worth of shares at a price of CA$0.35 each. That means that an insider was happy to buy shares at above the current price of CA$0.26. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Patrick Gagnon was the only individual insider to buy shares in the last twelve months.
Patrick Gagnon bought a total of 345.50k shares over the year at an average price of CA$0.35. 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!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Does Kobo Resources Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kobo Resources insiders own about CA$8.3m worth of shares. That equates to 30% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Kobo Resources Insiders?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Kobo Resources we think they are probably pretty confident of a bright future. 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. Every company has risks, and we've spotted 5 warning signs for Kobo Resources (of which 2 are a bit concerning!) you should know about.