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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in DIRTT Environmental Solutions Ltd. (TSE:DRT).
What Is Insider Selling?
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.
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.'
DIRTT Environmental Solutions Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Founder & Director of Innovation, Geoff Gosling, for CA$1.6m worth of shares, at about CA$7.00 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of CA$7.52. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was 67.2% of Geoff Gosling's stake.
In the last twelve months insiders purchased 59433 shares for CA$447k. On the other hand they divested 1.4m shares, for CA$9.0m. Over the last year we saw more insider selling of DIRTT Environmental Solutions shares, than buying. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at DIRTT Environmental Solutions Have Bought Stock Recently
There has been significantly more insider buying, than selling, at DIRTT Environmental Solutions, over the last three months. In fact, six insiders bought CA$334k worth of shares. But we did see Independent Director John Elliott sell shares worth CA$80k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does DIRTT Environmental Solutions Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, DIRTT Environmental Solutions insiders have about 0.5% of the stock, worth approximately CA$2.9m. We consider this fairly low insider ownership.
What Might The Insider Transactions At DIRTT Environmental Solutions Tell Us?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. Neither the level of insider ownership, nor the transactions over the last twelve months inspire us, but we think the recent buying is positive. Of course, the future is what matters most. So if you are interested in DIRTT Environmental Solutions, you should check out this free report on analyst forecasts for the company.
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.
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.