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 we’ll take a look at whether insiders have been buying or selling shares in Ur-Energy Inc. (TSE:URE).
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, 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. 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.’
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Ur-Energy Insider Transactions Over The Last Year
Chairman Jeffrey Klenda made the biggest insider sale in the last 12 months. That single transaction was for CA$88k worth of shares at a price of CA$0.88 each. That means that an insider was selling shares at slightly below the current price (CA$0.90). 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. Please note, however, that this single sale was just 3.6% of Jeffrey Klenda’s stake. Jeffrey Klenda was the only individual insider to sell shares in the last twelve months.
You can see the insider transactions (by 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!
I will like Ur-Energy better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests Ur-Energy insiders own 3.5% of the company, worth about CA$4.9m. We consider this fairly low insider ownership.
So What Do The Ur-Energy Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. The insider transactions at Ur-Energy are not inspiring us to buy. And we’re not picking up on high enough insider ownership to give us any comfort. Of course, the future is what matters most. So if you are interested in Ur-Energy, you should check out this free report on analyst forecasts for the company.
Of course Ur-Energy may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.