Should You Take Comfort From Insider Transactions At Black Diamond Group Limited (TSE:BDI)?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Black Diamond Group Limited (TSE:BDI).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.

We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company‚Äôs stock when the firm is about to reveal new agreements with customers and suppliers’.

See our latest analysis for Black Diamond Group

The Last 12 Months Of Insider Transactions At Black Diamond Group

Over the last year, we can see that the biggest insider purchase was by Chairman Trevor Haynes for CA$120k worth of shares, at about CA$2.40 per share. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. It’s not at all bad to see insiders buy shares at or above current prices.

In the last twelve months insiders purchased 151.43k shares for CA$378k. But they sold 4.21k for CA$14k. Overall, Black Diamond Group insiders were net buyers last year. Their average price was about CA$2.50. These transactions suggest that insiders have considered the current price of CA$2.00 attractive. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

TSX:BDI Insider Trading December 20th 18
TSX:BDI Insider Trading December 20th 18

Black Diamond Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Have Black Diamond Group Insiders Traded Recently?

Over the last three months, we’ve seen a bit of insider buying at Black Diamond Group. Trevor Haynes bought CA$23k worth in that time. On the other hand, Glen Clark sold CA$14k worth of shares. It is nice to see that insiders have bought, but the quantum isn’t large enough to get us excited.

Insider Ownership of Black Diamond Group

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Black Diamond Group insiders own about CA$17m worth of shares (which is 15% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Black Diamond Group Tell Us?

Insider purchases have outweighed sales, in the last three months. But overall the difference isn’t worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Black Diamond Group and we see no evidence to suggest they are worried about the future. Of course, the future is what matters most. So if you are interested in Black Diamond Group, you should check out this free report on analyst forecasts for the company.

But note: Black Diamond Group 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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.