Firetail Resources Insider Sellers Vindicated After 10.0% Drop

Insiders seem to have made the most of their holdings by selling AU$240k worth of Firetail Resources Limited (ASX:FTL) stock at an average sell price of AU$0.08 during the past year. After the stock price dropped 10.0% last week, the company's market value declined by AU$1.6m, but insiders were able to mitigate their losses.

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.

See our latest analysis for Firetail Resources

Firetail Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Paul Byrne, for AU$240k worth of shares, at about AU$0.08 per share. That means that an insider was selling shares at slightly below the current price (AU$0.099). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 50% of Paul Byrne's holding. Paul Byrne was the only individual insider to sell shares in the last twelve months.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Firetail Resources better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Firetail Resources Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Firetail Resources. Executive Chairman of the Board Brett Grosvenor spent AU$151k on stock, and there wasn't any selling. That shows some optimism about the company's future.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Firetail Resources insiders own 16% of the company, worth about AU$2.4m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Firetail Resources Insiders?

It is good to see the recent insider purchase. However, the longer term transactions are not so encouraging. While recent transactions indicate confidence in Firetail Resources, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. So they seem pretty well aligned, overall. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Firetail Resources is showing 5 warning signs in our investment analysis, and 4 of those are concerning...

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 of direct interests only, but not derivative transactions or indirect interests.

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