For New Murchison Gold Insiders, Selling AU$1.5m Of Shares Was A Smart Move

While New Murchison Gold Limited (ASX:NMG) shareholders have enjoyed a good week with stock up 11%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell AU$1.5m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

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.

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New Murchison Gold Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Philip Crabb, for AU$1.4m worth of shares, at about AU$0.015 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$0.02. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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. We note that the biggest single sale was only 20% of Philip Crabb's holding. Philip Crabb was the only individual insider to sell shares in the last twelve months.

Philip Crabb divested 155.06m shares over the last 12 months at an average price of AU$0.0094. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for New Murchison Gold

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Insiders At New Murchison Gold Have Sold Stock Recently

There was substantially more insider selling, than buying, of New Murchison Gold shares over the last three months. In that time, insider Philip Crabb dumped AU$1.4m worth of shares. On the flip side, Independent Non-Executive Director Joanne Palmer spent AU$10.0k on purchasing shares (as mentioned above) . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

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 21% of New Murchison Gold shares, worth about AU$44m. 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 New Murchison Gold Insiders?

Unfortunately, there has been more insider selling of New Murchison Gold stock, than 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'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for New Murchison Gold (2 don't sit too well with us!) that we believe deserve your full attention.

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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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.