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 before you buy or sell Amerigo Resources Ltd. (TSE:ARG), you may well want to know whether insiders have been buying or selling.
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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Amerigo Resources Insider Transactions Over The Last Year
President & CEO Robert Henderson made the biggest insider sale in the last 12 months. That single transaction was for CA$190k worth of shares at a price of CA$1.02 each. That means that an insider was selling shares at slightly below the current price (CA$1.15). 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. We note that the biggest single sale was only 19% of Robert Henderson’s holding.
In the last twelve months insiders purchased 503.60k shares for CA$473k. On the other hand they divested 233.58k shares, for CA$226k. In the last twelve months there was more buying than selling by Amerigo Resources insiders. The average buy price was around CA$0.94. Although they bought at below the recent price of CA$1.15 per share, it is good to see that insiders are willing to invest in the company. 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!
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Amerigo Resources Insiders Are Selling The Stock
The last three months saw some Amerigo Resources insider selling. Nauman Toor sold just US$36k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn’t sufficiently substantial to be of much use as a signal.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 19% of Amerigo Resources shares, worth about CA$40m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Amerigo Resources Insider Transactions Indicate?
Our data shows a little more insider selling than buying in the last three months. But the net divestment is not enough to concern us at all. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Amerigo Resources and their transactions don’t cause us concern. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Amerigo Resources.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.