Insider Traders Lose AU$447k As Southern Gold Drops \

The recent 17% drop in Southern Gold Limited's (ASX:SAU) stock could come as a blow to insiders who purchased AU$632k worth of stock at an average buy price of AU$0.065 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth AU$185k which is not ideal.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Southern Gold

The Last 12 Months Of Insider Transactions At Southern Gold

Over the last year, we can see that the biggest insider purchase was by insider Paul Shadbolt for AU$496k worth of shares, at about AU$0.12 per share. That means that an insider was happy to buy shares at above the current price of AU$0.019. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. We note that Paul Shadbolt was both the biggest buyer and the biggest seller.

Over the last year, we can see that insiders have bought 9.75m shares worth AU$632k. But they sold 2.31m shares for AU$290k. Overall, Southern Gold insiders were net buyers during the last year. The average buy price was around AU$0.065. These transactions suggest that insiders have considered the current price attractive. 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!

Southern Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership Of Southern Gold

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Southern Gold insiders own about AU$777k worth of shares (which is 14% of the company). However, it's possible that insiders might have an indirect interest through a more complex structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Does This Data Suggest About Southern Gold Insiders?

It doesn't really mean much that no insider has traded Southern Gold shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Southern Gold insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Southern Gold. Be aware that Southern Gold is showing 6 warning signs in our investment analysis, and 4 of those can't be ignored...

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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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.