Temas Resources share price gains 28%: Insiders may regret not having invested more

Insiders who have bought shares in Tema Resources over the last 12 months were handsomely rewarded last week. The market value of the company has increased by CA$2.3m, representing a 28% increase in shares. Investments of CA$301.8k are now worth CA$454.1k.

Analyzing insider activity

While we would never recommend that investors base their investment decisions solely on the decisions of company directors, it would be unwise to ignore them completely.

Last year, company officer and director Timothy Fernback made the largest insider transaction by purchasing CA$200k worth of shares at approximately CA$0.20 per share.

Despite the purchase at a much lower price than the current price of CA$0.30, we view the insider transaction as a positive sign. While this suggests that the insiders think the stock is undervalued at lower prices, this transaction does not say much about what they think of the current prices.

It is worth noting that Temas Resources insiders have bought shares but not sold any in the last year. This indicates a certain confidence in the company’s own management.

Insider participation and alignment

It is always beneficial to check how many shares are held by company insiders. At Temas Resources, insiders own 13% of the shares, which corresponds to about CA$1.0m. Although this is better than nothing, we are not fully convinced of this percentage.

Conclusion and outlook

The insiders’ recent purchases give reason for confidence, even though the company did not make a profit last year, which calls for caution. While the overall insider holdings are less impressive than hoped, the transaction histories suggest that Temas Resources insiders are well aligned and optimistic about the future. Insider transactions can help develop an investment thesis, but it is also important to know the risks that accompany the company.