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 Jadar Resources Limited (ASX:JDR).
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, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Jadar Resources
The Executive Director, Navinderjeet Singh, made the biggest insider sale in the last 12 months. That single transaction was for AU$800k worth of shares at a price of AU$0.04 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.029. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Navinderjeet Singh. Notably Navinderjeet Singh was also the biggest buyer, having purchased AU$200k worth of shares.
In the last twelve months insiders purchased 6.80m shares for AU$200k. On the other hand they divested 20.00m shares, for AU$800k. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Jadar 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.
Insiders at Jadar Resources Have Sold Stock Recently
We've seen more insider selling than insider buying at Jadar Resources recently. In that time, Executive Director Navinderjeet Singh dumped AU$800k worth of shares. On the flip side, Executive Director Navinderjeet Singh spent AU$35k on purchasing shares. Generally this level of net selling might be considered a bit bearish.
Does Jadar Resources Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 18% of Jadar Resources shares, worth about AU$3.4m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Jadar Resources Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Jadar Resources stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! 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. To that end, you should learn about the 5 warning signs we've spotted with Jadar Resources (including 2 which are a bit concerning).
Of course Jadar Resources 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.
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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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