We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Gold Road Resources Limited (ASX:GOR), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Gold Road Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Wilhelmus Pot sold AU$2.7m worth of shares at a price of AU$1.09 per share. That is hardly a positive sign, even though it took place above the latest price (AU$0.87). So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders purchased 272.18k shares for AU$182k. But they sold 4.02m for AU$4.0m. All up, insiders sold more shares in Gold Road Resources than they bought, over the last year. The average sell price was around AU$0.98. We don’t gain confidence from insider selling below the recent share price of AU$0.87. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Gold Road Resources 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.
Insiders at Gold Road Resources Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Gold Road Resources. Overall, 3 insiders shelled out AU$83k for shares in the company — and none sold. This is a positive in our book as it implies some confidence.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insiders own 5.0% of Gold Road Resources shares, worth about AU$39m. 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 Gold Road Resources Insiders?
It’s certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn’t so positive. While recent transactions indicate confidence in Gold Road Resources, insiders don’t own enough of the company to overcome our cautiousness about the longer term transactions. So they seem pretty well aligned, overall. Of course, the future is what matters most. So if you are interested in Gold Road Resources, you should check out this free report on analyst forecasts for the company.
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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.