Stock Analysis

De Grey Mining Limited (ASX:DEG) Insiders Have Been Selling

ASX:DEG
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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. 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 before you buy or sell De Grey Mining Limited (ASX:DEG), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

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The Last 12 Months Of Insider Transactions At De Grey Mining

In the last twelve months, the biggest single sale by an insider was when the Technical Director & Operations Manager and Director, Andrew Beckwith, sold AU$720k worth of shares at a price of AU$1.20 per share. So what is clear is that an insider saw fit to sell at around the current price of AU$1.04. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. The only individual insider seller over the last year was Andrew Beckwith.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
ASX:DEG Insider Trading Volume December 14th 2020

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De Grey Mining Insiders Are Selling The Stock

We've seen more insider selling than insider buying at De Grey Mining recently. In total, Technical Director & Operations Manager and Director Andrew Beckwith sold AU$720k worth of shares in that time. On the flip side, Lead Independent Director Peter Hood spent AU$360k on purchasing shares. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.

Does De Grey Mining Boast High 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. De Grey Mining insiders own about AU$77m worth of shares. That equates to 5.7% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About De Grey Mining Insiders?

The stark truth for De Grey Mining is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing De Grey Mining. At Simply Wall St, we've found that De Grey Mining has 6 warning signs (2 are significant!) that deserve your attention before going any further with your analysis.

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

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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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