Have Insiders Been Selling ARC Resources Ltd. (TSE:ARX) Shares?

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 we’ll take a look at whether insiders have been buying or selling shares in ARC Resources Ltd. (TSE:ARX).

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 in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don’t think shareholders should simply follow insider transactions. 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.

Check out our latest analysis for ARC Resources

ARC Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Frederick Dyment, for CA$504k worth of shares, at about CA$3.38 per share. That means that even when the share price was below the current price of CA$4.53, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. We note that the biggest single sale was 100% of Frederick Dyment’s holding.

In the last twelve months insiders purchased 148.53k shares for CA$689k. On the other hand they divested 199800 shares, for CA$767k. Over the last year we saw more insider selling of ARC Resources shares, than buying. They sold for an average price of about CA$3.84. It’s not particularly great to see insiders were selling shares around current prices. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

TSX:ARX Insider Trading Volume June 25th 2020
TSX:ARX Insider Trading Volume June 25th 2020

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

ARC Resources Insiders Bought Stock Recently

There was some insider buying at ARC Resources over the last quarter. Vice President of Development & Planning Larissa Conrad shelled out CA$32k for shares in that time. It’s great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, ARC Resources insiders have about 0.4% of the stock, worth approximately CA$6.5m. We consider this fairly low insider ownership.

What Might The Insider Transactions At ARC Resources Tell Us?

We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn’t worth writing home about. The insider transactions at ARC Resources are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. For example – ARC Resources has 2 warning signs we think you should be aware of.

But note: ARC Resources 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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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