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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 before you buy or sell Canadian Natural Resources Limited (TSE:CNQ), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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 Canadian Natural Resources
The , Réal Cusson, made the biggest insider sale in the last 12 months. That single transaction was for CA$3.7m worth of shares at a price of CA$47.44 each. 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$36.64. So it may not shed much light on insider confidence at current levels. Notably Réal Cusson was also the biggest buyer, having purchased CA$4.2m worth of shares.
All up, insiders sold more shares in Canadian Natural Resources than they bought, over the last year. 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!
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).
Insiders at Canadian Natural Resources Have Sold Stock Recently
The last three months saw significant insider selling at Canadian Natural Resources. In total, insiders dumped CA$160k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Canadian Natural Resources
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. Canadian Natural Resources insiders own 2.3% of the company, currently worth about CA$1.0b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Canadian Natural Resources Tell Us?
Insiders haven't bought Canadian Natural Resources stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. But since Canadian Natural Resources is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Canadian Natural Resources, 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.
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 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.