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Should You Be Worried About Insider Transactions At Endeavour Silver Corp. (TSE:EDR)?

Simply Wall St

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 Endeavour Silver Corp. (TSE:EDR), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

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.

Check out our latest analysis for Endeavour Silver

Endeavour Silver Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the CEO & Director, Bradford Cooke, sold CA$71k worth of shares at a price of CA$3.55 per share. So we know that an insider sold shares at around the present share price of CA$2.97. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. The only individual insider seller over the last year was Bradford Cooke.

Bradford Cooke sold a total of 40000 shares over the year at an average price of US$3.50. 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!

TSX:EDR Recent Insider Trading, November 6th 2019
TSX:EDR Recent Insider Trading, November 6th 2019

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Endeavour Silver Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Endeavour Silver. In total, CEO & Director Bradford Cooke dumped US$140k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership of Endeavour Silver

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. Based on our data, Endeavour Silver insiders have about 0.9% of the stock, worth approximately CA$3.8m. I generally like to see higher levels of ownership.

So What Do The Endeavour Silver Insider Transactions Indicate?

An insider hasn't bought Endeavour Silver stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. As the saying goes, only fools rush in. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Endeavour Silver 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.

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 editorial-team@simplywallst.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.