Don't Ignore The Insider Selling In Sprott

Some Sprott Inc. (TSE:SII) shareholders may be a little concerned to see that the Senior Managing Partner, Kevin Hibbert, recently sold a substantial CA$848k worth of stock at a price of CA$56.50 per share. However, that sale only accounted for 9.2% of their holding, so arguably it doesn't say much about their conviction.

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Sprott Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Senior Managing Partner, John Ciampaglia, for CA$1.9m worth of shares, at about CA$64.25 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of CA$57.61. So it may not tell us anything about how insiders feel about the current share price.

Over the last year we saw more insider selling of Sprott shares, than buying. They sold for an average price of about US$60.53. 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insider Ownership Of Sprott

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. Sprott insiders own 19% of the company, currently worth about CA$260m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Sprott Tell Us?

Insiders haven't bought Sprott stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Sprott makes money, and is growing profits. 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. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Sprott.

But note: Sprott 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.

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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.