Yahoo Finance Read This Before Buying Franco-Nevada Corporation (TSE:FNV) Shares
We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Franco-Nevada Corporation (TSE:FNV).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
See our latest analysis for Franco-Nevada
Franco-Nevada Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when CEO & Director David Harquail sold CA$2.7m worth of shares at a price of CA$89.18 per share. That means that even when the share price was below the current price of CA$93.08, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was just 2.6% of David Harquail’s stake.
All up, insiders sold more shares in Franco-Nevada than they bought, over the last year. The average sell price was around US$89.88. We don’t gain confidence from insider selling below the recent share price. But we wouldn’t put too much weight on the insider selling. You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Franco-Nevada Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Franco-Nevada recently. In that time, insiders dumped US$2.8m worth of shares. On the other hand we note Independent Director Catharine E. Farrow bought US$25k worth of shares, as previously mentioned. Generally this level of net selling might be considered a bit bearish.
Does Franco-Nevada Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Franco-Nevada insiders own 1.6% of the company, currently worth about CA$289m based on the recent share price. 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 Does This Data Suggest About Franco-Nevada Insiders?
The stark truth for Franco-Nevada is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. On the plus side, Franco-Nevada makes money, and is growing profits. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Franco-Nevada.
But note: Franco-Nevada may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
