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 Silvercorp Metals Inc. (TSE:SVM).
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’
The Last 12 Months Of Insider Transactions At Silvercorp Metals
Chairman & CEO Rui Feng made the biggest insider sale in the last 12 months. That single transaction was for CA$365k worth of shares at a price of CA$3.69 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of CA$2.68. So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 423.40k shares for a total of CA$1.5m. Over the last year we saw more insider selling of Silvercorp Metals shares, than buying. They sold for an average price of about US$3.61. We are not joyful about insider selling. But the selling was at much higher prices than the current share price (CA$2.68), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions 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 Silvercorp Metals better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Silvercorp Metals Insiders Are Selling The Stock
The last three months saw some Silvercorp Metals insider selling. Chief Financial Officer Derek Liu sold just US$56k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn’t sufficiently substantial to be of much use as a signal.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Silvercorp Metals insiders own about CA$16m worth of shares (which is 3.7% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Silvercorp Metals Insiders?
An insider sold Silvercorp Metals shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Silvercorp Metals.
Of course Silvercorp Metals 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.