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Should You Be Worried About Insider Transactions At OceanaGold Corporation (TSE:OGC)?

Terrence Jolly

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 OceanaGold Corporation (TSE:OGC).

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 equally, we would consider it foolish to ignore insider transactions altogether. 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’.

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The Last 12 Months Of Insider Transactions At OceanaGold

President Michael Wilkes made the biggest insider sale in the last 12 months. That single transaction was for CA$174k worth of shares at a price of CA$4.04 each. That means that even when the share price was below the current price of CA$4.75, an insider wanted to cash in some shares. While their view may have changed since they sold, this isn’t a particularly bullish sign. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 6.3% of Michael Wilkes’s holding.

Over the last year we saw more insider selling of OceanaGold shares, than buying. The average sell price was around US$4.10. It’s not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

TSX:OGC Insider Trading January 11th 19

OceanaGold is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at OceanaGold Have Bought Stock Recently

Over the last three months, we’ve seen a bit of insider buying at OceanaGold. Non-Executive Director Ian Reid bought US$44k worth of shares in that time. It’s good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn’t enough for us too put much weight on it, as a single factor.

Does OceanaGold Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. From our data, it seems that OceanaGold insiders own 0.4% of the company, worth about CA$11m. Whilst better than nothing, we’re not overly impressed by these holdings.

So What Do The OceanaGold Insider Transactions Indicate?

Insider purchases have outweighed sales, in the last three months. But the net investment is not enough to encourage us much. Still, the insider transactions at OceanaGold in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for OceanaGold.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.