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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 Continental Gold Inc. (TSE:CNL).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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’.
Continental Gold Insider Transactions Over The Last Year
Director Martín Carrizosa made the biggest insider purchase in the last 12 months. That single transaction was for CA$220k worth of shares at a price of CA$3.25 each. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders bought 371.98k shares for a total of CA$1.1m. In total, Continental Gold insiders bought more than they sold over the last year. The average buy price was around CA$2.97. This is nice to see since it implies that insiders might see value around current prices (around CA$2.34). You can see the insider transactions (by 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!
Continental Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Continental Gold Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Continental Gold. In total, insiders bought US$187k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
Does Continental Gold 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. We usually like to see fairly high levels of insider ownership. Our data indicates that Continental Gold insiders own about CA$7.8m worth of shares (which is 1.8% of the company). We do generally prefer see higher levels of insider ownership.
So What Do The Continental Gold Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Continental Gold stock. Of course, the future is what matters most. So if you are interested in Continental Gold, you should check out this free report on analyst forecasts for the company.
Of course Continental Gold may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 email@example.com.