Insider Sellers Might Regret Selling ThreeD Capital Shares at a Lower Price Than Current Market Value

Despite the fact that ThreeD Capital Inc.'s (CSE:IDK) value has dropped 32% in the last week insiders who sold CA$1.6m worth of stock in the past 12 months have had less success. The average selling price of CA$0.16 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

ThreeD Capital Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Founder Sheldon Inwentash bought CA$600k worth of shares at a price of CA$0.15 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$0.10). 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. 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.

Over the last year, we can see that insiders have bought 7.16m shares worth CA$1.1m. On the other hand they divested 10.30m shares, for CA$1.6m. In total, ThreeD Capital insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and 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!

See our latest analysis for ThreeD Capital

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Are ThreeD Capital Insiders Buying Or Selling?

We saw some ThreeD Capital insider buying shares in the last three months. insider Lynn Factor shelled out CA$7.1k for shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Insider Ownership

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. It appears that ThreeD Capital insiders own 32% of the company, worth about CA$2.8m. 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 Do The ThreeD Capital Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. We don't take much encouragement from the transactions by ThreeD Capital insiders. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ThreeD Capital. For instance, we've identified 6 warning signs for ThreeD Capital (5 are significant) you should be aware of.

But note: ThreeD Capital 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 currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.