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 we'll take a look at whether insiders have been buying or selling shares in Bluestone Resources Inc. (CVE:BSR).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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'.
Bluestone Resources Insider Transactions Over The Last Year
Notably, that recent purchase by Independent Director James Paterson was not the only time they bought Bluestone Resources shares this year. They previously made an even bigger purchase of CA$370k worth of shares at a price of CA$1.51 per share. That means that an insider was happy to buy shares at around the current price of CA$1.75. 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. 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.
In the last twelve months insiders purchased 748.60k shares for CA$959k. But they sold 50000 for CA$60k. In total, Bluestone Resources insiders bought more than they sold over the last year. They paid about CA$1.28 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Bluestone Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Bluestone Resources Insiders Bought Stock Recently
We saw some Bluestone Resources insider buying shares in the last three months. Independent Director James Paterson purchased CA$61k worth of shares in that period. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.
Does Bluestone Resources Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 7.5% of Bluestone Resources shares, worth about CA$11m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Bluestone Resources Insiders?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Insiders likely see value in Bluestone Resources shares, given these transactions (along with notable insider ownership of the company). Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Bluestone Resources.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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