Selling US$4.3m worth of Newcrest Mining Limited (ASX:NCM) stock at high prices would have gotten insiders a handsome reward

By
Simply Wall St
Published
February 17, 2022
ASX:NCM
Source: Shutterstock

Newcrest Mining Limited's (ASX:NCM) stock rose 5.0% last week, but insiders who sold US$4.3m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of US$24.55, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Newcrest Mining

Newcrest Mining Insider Transactions Over The Last Year

The MD, CEO & Director, Sandeep Biswas, made the biggest insider sale in the last 12 months. That single transaction was for AU$2.3m worth of shares at a price of AU$24.37 each. So what is clear is that an insider saw fit to sell at around the current price of AU$23.85. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Notably Sandeep Biswas was also the biggest buyer, having purchased AU$2.3m worth of shares.

Over the last year, we can see that insiders have bought 93.95k shares worth AU$2.3m. But insiders sold 175.98k shares worth AU$4.3m. All up, insiders sold more shares in Newcrest Mining than they bought, over the last year. 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!

insider-trading-volume
ASX:NCM Insider Trading Volume February 17th 2022

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

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Newcrest Mining insiders own about AU$32m worth of shares. That equates to 0.2% 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.

What Might The Insider Transactions At Newcrest Mining Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Newcrest Mining insiders. But it's good to see that insiders own shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Newcrest Mining. Be aware that Newcrest Mining is showing 2 warning signs in our investment analysis, and 1 of those is 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, but not derivative transactions.

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