Don't Ignore The Insider Selling In Dominion Lending Centres

Some Dominion Lending Centres Inc. (TSE:DLCG) shareholders may be a little concerned to see that the Co-Founder, Gary Mauris, recently sold a substantial CA$30m worth of stock at a price of CA$7.60 per share. That sale reduced their total holding by 16% which is hardly insignificant, but far from the worst we've seen.

View our latest analysis for Dominion Lending Centres

Dominion Lending Centres Insider Transactions Over The Last Year

Notably, that recent sale by Gary Mauris is the biggest insider sale of Dominion Lending Centres shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (CA$8.10). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 16% of Gary Mauris's holding.

In the last twelve months insiders purchased 18.90k shares for CA$120k. But they sold 8.03m shares for CA$61m. All up, insiders sold more shares in Dominion Lending Centres than they bought, over the last year. The average sell price was around CA$7.54. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Dominion Lending Centres better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, 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. Dominion Lending Centres insiders own about CA$406m worth of shares (which is 64% 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 Dominion Lending Centres Tell Us?

Unfortunately, there has been more insider selling of Dominion Lending Centres stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Dominion Lending Centres is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for Dominion Lending Centres (2 make us uncomfortable!) and we strongly recommend you look at these before investing.

Of course Dominion Lending Centres 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 of direct interests only, but not derivative transactions or indirect interests.

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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.