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 before you buy or sell Serengeti Resources Inc. (CVE:SIR), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Serengeti Resources
Over the last year, we can see that the biggest insider purchase was by insider Michael Kosowan for CA$120k worth of shares, at about CA$0.24 per share. That means that even when the share price was higher than CA$0.21 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Over the last year, we can see that insiders have bought 1.25m shares worth CA$269k. But insiders sold 70000 shares worth CA$21k. In total, Serengeti Resources insiders bought more than they sold over the last year. They paid about CA$0.21 on average. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Serengeti Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Serengeti Resources Insiders Bought Stock Recently
It's good to see that Serengeti Resources insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought CA$155k worth of shares. This is a positive in our book as it implies some confidence.
Does Serengeti Resources Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 7.6% of Serengeti Resources shares, worth about CA$1.7m, according to our data. However, it's possible that insiders might have an indirect interest through a more complex structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Do The Serengeti Resources Insider Transactions Indicate?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Serengeti Resources insiders are reasonably well aligned, and optimistic for the future. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course Serengeti Resources 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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