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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 Hudbay Minerals Inc. (TSE:HBM).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
The Last 12 Months Of Insider Transactions At Hudbay Minerals
In the last twelve months, the biggest single sale by an insider was when the Independent Director, Daniel Quintanilla, sold CA$722k worth of shares at a price of CA$4.02 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of CA$4.51. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 95% of Daniel Quintanilla's holding. Notably Daniel Quintanilla was also the biggest buyer, having purchased CA$2.9m worth of shares.
Over the last year, we can see that insiders have bought 941.80k shares worth CA$2.9m. On the other hand they divested 312.60k shares, for CA$1.3m. In the last twelve months there was more buying than selling by Hudbay Minerals insiders. They paid about CA$3.13 on average. To my mind it is good 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. 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!
Hudbay Minerals 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.
Hudbay Minerals Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Hudbay Minerals shares over the last three months. In that time, insiders dumped CA$750k worth of shares. On the other hand we note insiders bought CA$670k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Does Hudbay Minerals Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Hudbay Minerals insiders own about CA$10m worth of shares (which is 0.9% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Does This Data Suggest About Hudbay Minerals Insiders?
Unfortunately, there has been more insider selling of Hudbay Minerals stock, than buying, in the last three months. On the other hand, the insider transactions over the last year are encouraging. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Hudbay Minerals has 2 warning signs we think you should be aware of.
But note: Hudbay Minerals 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.
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.
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. 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.
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