Stock Analysis

How Much Are Austral Gold Limited (ASX:AGD) Insiders Spending On Buying Shares?

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ASX:AGD
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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 Austral Gold Limited (ASX:AGD).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 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 Austral Gold

Austral Gold Insider Transactions Over The Last Year

Chairman of the Board Eduardo Sergio Elsztain made the biggest insider purchase in the last 12 months. That single transaction was for AU$262k worth of shares at a price of AU$0.068 each. So it's clear an insider wanted to buy, at around the current price, which is AU$0.08. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the Austral Gold insider decided to buy shares at close to current prices. Eduardo Sergio Elsztain was the only individual insider to buy over the year.

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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

ASX:AGD Recent Insider Trading, October 8th 2019
ASX:AGD Recent Insider Trading, October 8th 2019

Insider Ownership of Austral Gold

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own AU$1.7m worth of Austral Gold stock, about 4.2% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Austral Gold Insiders?

The fact that there have been no Austral Gold insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Austral Gold insiders bought more shares in the company. Along with insider transactions, I recommend checking if Austral Gold is growing revenue. This free chart of historic revenue and earnings should make that easy.

Of course Austral Gold 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.

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.

About ASX:AGD

Austral Gold

Austral Gold Limited, together with its subsidiaries, engages in the exploration and development of gold and silver deposits.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth0
Past Performance0
Financial Health3
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Mediocre balance sheet and slightly overvalued.