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 Spruce Ridge Resources Ltd. (CVE:SHL).
Do Insider Transactions Matter?
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, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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.’
The Last 12 Months Of Insider Transactions At Spruce Ridge Resources
In the last twelve months, the biggest single sale by an insider was when CEO, President & Director John Ryan sold CA$110k worth of shares at a price of CA$0.06 per share. That means that an insider was selling shares at slightly below the current price (CA$0.095). While sellers have a variety of reasons for selling, this isn’t particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. We note that the biggest single sale was only 15.4% of John Ryan’s holding. The only individual insider seller over the last year was John Ryan. Notably John Ryan was also the biggest buyer, having purchased CA$50k worth of shares.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Spruce Ridge Resources
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Spruce Ridge Resources insiders own about CA$1.1m worth of shares (which is 12% of the company). Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Do The Spruce Ridge Resources Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. And our longer term analysis of insider transactions didn’t bring confidence, either. When you consider that most companies have higher levels of insider ownership, we’re a little wary. As the saying goes, only fools rush in. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.