Should You Be Worried About Insider Transactions At Newcrest Mining Limited (ASX:NCM)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Newcrest Mining Limited (ASX:NCM).

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, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

Check out our latest analysis for Newcrest Mining

Newcrest Mining Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the MD, CEO & Director, Sandeep Biswas, for AU$2.4m worth of shares, at about AU$30.51 per share. That means that an insider was selling shares at around the current price of AU$26.30. While insider selling is a negative, to us, it is more negative if the shares are sold 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.

In the last twelve months insiders purchased 188.10k shares for AU$4.0k. But insiders sold 206428 shares worth AU$6.7m. Over the last year we saw more insider selling of Newcrest Mining shares, than buying. The sellers received a price of around US$32.24, on average. It is certainly not great to see that insiders have sold shares in the company. But the selling was at much higher prices than the current share price (AU$26.30), so it probably doesn't tell us a lot about the value on offer today. You can see the insider transactions (by 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 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.

Does Newcrest Mining Boast High 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. Newcrest Mining insiders own about AU$30m worth of shares. That equates to 0.2% of the company. 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 Newcrest Mining Insider Transactions Indicate?

The fact that there have been no Newcrest Mining insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Newcrest Mining insiders. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Newcrest Mining.

But note: Newcrest 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.