We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in ASA Gold and Precious Metals Limited (NYSE:ASA).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. 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'.
The Last 12 Months Of Insider Transactions At ASA Gold and Precious Metals
Over the last year, we can see that the biggest insider sale was by the Principal Executive Officer & COO, Alexander Merk, for US$184k worth of shares, at about US$13.55 per share. That means that even when the share price was below the current price of US$21.62, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 30% of Alexander Merk's holding. The only individual insider seller over the last year was Alexander Merk. Notably Alexander Merk was also the biggest buyer, having purchased US$221k worth of shares.
Happily, we note that in the last year insiders paid US$221k for 17.45k shares. But they sold 13.60k shares for US$184k. Overall, ASA Gold and Precious Metals insiders were net buyers during the last year. The average buy price was around US$12.66. We don't deny that it is nice to see insiders buying stock 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
ASA Gold and Precious Metals Insiders Bought Stock Recently
We saw some ASA Gold and Precious Metals insider buying shares in the last three months. Independent Non Executive Chairman Mary Hoene shelled out US$16k for shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Does ASA Gold and Precious Metals 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. Our data suggests ASA Gold and Precious Metals insiders own 0.3% of the company, worth about US$1.2m. We consider this fairly low insider ownership.
So What Do The ASA Gold and Precious Metals Insider Transactions Indicate?
We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more ASA Gold and Precious Metals stock. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ASA Gold and Precious Metals. Every company has risks, and we've spotted 2 warning signs for ASA Gold and Precious Metals you should know about.
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 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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