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 before you buy or sell Orefinders Resources Inc. (CVE:ORX), you may well want to know whether insiders have been buying or selling.
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Orefinders Resources Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by VP of Exploration & Director Charles Beaudry for CA$220k worth of shares, at about CA$0.05 per share. That implies that an insider found the current price of CA$0.055 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.
Orefinders Resources insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around CA$0.041. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
Orefinders Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Orefinders Resources Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Orefinders Resources. Overall, two insiders shelled out CA$65k for shares in the company -- and none sold. That shows some optimism about the company's future.
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 12% of Orefinders Resources shares, worth about CA$823k, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Orefinders Resources Insider Transactions Indicate?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Orefinders Resources stock. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
But note: Orefinders Resources 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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.
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