It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Black Iron Inc. (TSE:BKI), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Black Iron
Over the last year, we can see that the biggest insider sale was by the Executive Officer, Stan Bharti, for CA$1.6m worth of shares, at about CA$0.10 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$0.075. So it may not tell us anything about how insiders feel about the current share price. Stan Bharti was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid CA$70k for 1.0m shares. But they sold 16.4m for CA$1.6m. You can see the insider transactions (by 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!
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).
Black Iron Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Black Iron. Director John Detmold purchased US$16k worth of shares in that period. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Black Iron insiders own 4.0% of the company, worth about CA$565k. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Black Iron Insiders?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. Our analysis of Black Iron insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
But note: Black Iron 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.
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.