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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in DIRTT Environmental Solutions Ltd. (TSE:DRT).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At DIRTT Environmental Solutions
In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Director of Innovation, Geoff Gosling, sold CA$1.6m worth of shares at a price of CA$7.00 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of CA$7.87. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. We note that the biggest single sale was 67.2% of Geoff Gosling’s holding.
Happily, we note that in the last year insiders paid CA$447k for 59433 shares. On the other hand they divested 1.4m shares, for CA$9.0m. In total, DIRTT Environmental Solutions insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Insiders at DIRTT Environmental Solutions Have Bought Stock Recently
There has been significantly more insider buying, than selling, at DIRTT Environmental Solutions, over the last three months. In total, six insiders bought CA$334k worth of shares in that time. But Independent Director John Elliott sold shares worth CA$80k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does DIRTT Environmental Solutions 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. 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, DIRTT Environmental Solutions insiders have about 0.5% of the stock, worth approximately CA$3.0m. I generally like to see higher levels of ownership.
So What Does This Data Suggest About DIRTT Environmental Solutions Insiders?
The recent insider purchases are heartening. On the other hand the transaction history, over the last year, isn’t so positive. We’re not thrilled with the relatively low insider ownership and the longer term transaction history. But we like the recent purchasing. Of course, the future is what matters most. So if you are interested in DIRTT Environmental Solutions, you should check out this free report on analyst forecasts for the company.
Of course DIRTT Environmental Solutions 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 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.