Insiders are probably glad they sold their shares in Chalice Mining Limited (ASX:CHN) after 12% drop

By
Simply Wall St
Published
May 10, 2022
ASX:CHN
Source: Shutterstock

Over the past year, insiders sold AU$483k worth of Chalice Mining Limited ( ASX:CHN ) stock at an average price of AU$8.28 per share allowing them to get the most out of their money. The company’s market cap plunged by AU$305m after price dropped by 12% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Chalice Mining

Chalice Mining Insider Transactions Over The Last Year

The insider, Stephen Quin, made the biggest insider sale in the last 12 months. It is important to note that Mr. Quin had announced his departure from the company in August 2021, and fully left his role in November 2021 (as such, he is currently no longer an insider). That single transaction was for AU$226k worth of shares at a price of AU$7.63 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (AU$6.38). So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Stephen Quin.

Stephen Quin sold a total of 58.38k shares over the year at an average price of AU$8.28. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:CHN Insider Trading Volume May 10th 2022

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

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Chalice Mining insiders own about AU$312m worth of shares (which is 14% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Chalice Mining Insiders?

The fact that there have been no Chalice Mining insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Chalice Mining insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 6 warning signs for Chalice Mining (3 are potentially serious!) that we believe deserve your full attention.

But note: Chalice Mining 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.