Insiders who acquired AU$4.47m worth of Eagle Mountain Mining Limited's (ASX:EM2) stock at an average price of AU$0.011 in the past 12 months may be dismayed by the recent 14% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$2.52m which is not ideal.

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 Eagle Mountain Mining

Eagle Mountain Mining Insider Transactions Over The Last Year

The MD & Executive Director Charles Bass made the biggest insider purchase in the last 12 months. That single transaction was for AU$3.0m worth of shares at a price of AU$0.008 each. That means that even when the share price was higher than AU$0.006 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months Eagle Mountain Mining insiders were buying shares, but not selling. Their average price was about AU$0.011. I'd consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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).

Insiders At Eagle Mountain Mining Have Bought Stock Recently

Over the last quarter, Eagle Mountain Mining insiders have spent a meaningful amount on shares. Overall, three insiders shelled out AU$3.2m for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership

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. It's great to see that Eagle Mountain Mining insiders own 48% of the company, worth about AU$3.3m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Eagle Mountain Mining Insider Transactions Indicate?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Eagle Mountain Mining insiders are well aligned, and quite possibly think the share price is too low. Looks promising! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Eagle Mountain Mining. Our analysis shows 6 warning signs for Eagle Mountain Mining (5 can't be ignored!) and we strongly recommend you look at them before investing.

Of course Eagle Mountain Mining 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 of direct interests only, but not derivative transactions or indirect interests.

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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.