Should You Review Recent Insider Transactions At ARC Resources Ltd. (TSE:ARX)?

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 shareholders might well want to know whether insiders have been buying or selling shares in ARC Resources Ltd. (TSE:ARX).

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 in the company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for ARC Resources

The Last 12 Months Of Insider Transactions At ARC Resources

The insider, Frederick Dyment, made the biggest insider sale in the last 12 months. That single transaction was for CA$504k worth of shares at a price of CA$3.38 each. That means that even when the share price was below the current price of CA$6.14, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 100% of Frederick Dyment's holding.

Over the last year, we can see that insiders have bought 77.95k shares worth CA$262k. On the other hand they divested 159.80k shares, for CA$534k. All up, insiders sold more shares in ARC Resources than they bought, over the last year. The sellers received a price of around CA$3.34, on average. We don't gain confidence from insider selling below the recent share 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!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. From our data, it seems that ARC Resources insiders own 0.4% of the company, worth about CA$9.9m. We do generally prefer see higher levels of insider ownership.

So What Does This Data Suggest About ARC Resources Insiders?

It doesn't really mean much that no insider has traded ARC Resources shares in the last quarter. We don't take much encouragement from the transactions by ARC Resources insiders. And we're not picking up on high enough insider ownership to give us any comfort. 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. Every company has risks, and we've spotted 1 warning sign for ARC Resources you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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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. 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.
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