It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in The Yield Growth Corp. (CNSX:BOSS).
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.
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Yield Growth
Over the last year, we can see that the biggest insider sale was by the insider, Penny Green, for CA$303k worth of shares, at about CA$0.83 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of CA$0.29. So it is hard to draw any strong conclusion from it. Notably Penny Green was also the biggest buyer, having purchased CA$556k worth of shares.
Over the last year, we can see that insiders have bought 1406500 shares worth CA$556k. But insiders sold 1923500 shares worth CA$926k. Over the last year we saw more insider selling of Yield Growth shares, than buying. They sold for an average price of about CA$0.48. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is CA$0.29). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Yield Growth Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Yield Growth shares over the last three months. We note insiders cashed in CA$318k worth of shares. On the other hand we note insiders bought CA$30k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Yield Growth insiders own 35% of the company, worth about CA$11m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Yield Growth Tell Us?
Unfortunately, there has been more insider selling of Yield Growth stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd think twice before buying! Of course, the future is what matters most. So if you are interested in Yield Growth, you should check out this free report on analyst forecasts for the company.
Of course Yield Growth may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.