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We often see insiders buying up shares in companies that perform well over the long term. 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 Star Diamond Corporation (TSE:DIAM), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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 Star Diamond
In the last twelve months, the biggest single sale by an insider was when the , George Read, sold CA$71k worth of shares at a price of CA$0.24 per share. That means that an insider was selling shares at around the current price of CA$0.21. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. George Read was the only individual insider to sell over the last year.
George Read sold a total of 550k shares over the year at an average price of CA$0.24. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Star Diamond
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our data suggests Star Diamond insiders own 4.2% of the company, worth about CA$3.5m. We consider this fairly low insider ownership.
What Might The Insider Transactions At Star Diamond Tell Us?
It doesn't really mean much that no insider has traded Star Diamond shares in the last quarter. The insider transactions at Star Diamond are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. Along with insider transactions, I recommend checking if Star Diamond is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Star Diamond 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 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.