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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Black Diamond Group Limited (TSE:BDI).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Black Diamond Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Edward Kernaghan, for CA$237k worth of shares, at about CA$2.37 per share. That means that an insider was selling shares at around the current price of CA$2.13. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. 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 52102 shares for CA$126k. On the other hand they divested 110k shares, for CA$262k. Over the last year we saw more insider selling of Black Diamond Group shares, than buying. The average sell price was around CA$2.39. We don’t gain confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Black Diamond Group Have Sold Stock Recently
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Black Diamond Group. We note Edward Kernaghan cashed in CA$237k worth of shares. On the other hand we note Independent Director Edward Kernaghan bought CA$27k worth of shares. Generally this level of net selling might be considered a bit bearish.
Does Black Diamond Group Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 16% of Black Diamond Group shares, worth about CA$19m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Black Diamond Group Tell Us?
The stark truth for Black Diamond Group is that there has been more insider selling than insider 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’re in no rush to buy! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.