Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
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 before you buy or sell Black Diamond Group Limited (TSE:BDI), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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.'
Black Diamond Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Edward Kernaghan, for CA$237k worth of shares, at about CA$2.37 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (CA$1.97). So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid CA$126k for 52102 shares. On the other hand they divested 110k shares, for CA$262k. Over the last year we saw more insider selling of Black Diamond Group shares, than buying. The average sell price was around CA$2.39. We are not joyful about insider selling. But we note that the selling, on average, was at well above the recently traded price of CA$1.97. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Black Diamond Group Have Sold Stock Recently
There was substantially more insider selling, than buying, of Black Diamond Group shares over the last three months. In that time, Edward Kernaghan dumped CA$237k worth of shares. Meanwhile Independent Director Edward Kernaghan bought CA$27k worth. Generally this level of net selling might be considered a bit bearish.
Does Black Diamond Group Boast High Insider Ownership?
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 16% of Black Diamond Group shares, worth about CA$18m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Black Diamond Group Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Black Diamond Group, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own shares, they don't own a heap, and they have been selling. We'd think twice before buying! Of course, the future is what matters most. So if you are interested in Black Diamond Group, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.