As Westgold Resources Limited (ASX:WGX) drops to AU$708m market cap, insiders might rethink their AU$1.5m stock purchase earlier this year

By
Simply Wall St
Published
August 11, 2021
ASX:WGX
Source: Shutterstock

Insiders who bought AU$1.5m worth of Westgold Resources Limited's (ASX:WGX) stock at an average buy price of AU$2.06 over the last year may be disappointed by the recent 9.0% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$1.2m, which is not great.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Westgold Resources

The Last 12 Months Of Insider Transactions At Westgold Resources

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Chairman Peter Cook bought AU$981k worth of shares at a price of AU$1.96 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$1.67). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Westgold Resources insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:WGX Insider Trading Volume August 12th 2021

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

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. We usually like to see fairly high levels of insider ownership. Westgold Resources insiders own about AU$26m worth of shares. That equates to 3.7% 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.

What Might The Insider Transactions At Westgold Resources Tell Us?

It doesn't really mean much that no insider has traded Westgold Resources shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Westgold Resources and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Westgold Resources has 2 warning signs and it would be unwise to ignore these.

Of course Westgold 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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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