It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Energy Fuels Inc. (TSE:EFR).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
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.’
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The Last 12 Months Of Insider Transactions At Energy Fuels
In the last twelve months, the biggest single sale by an insider was when the President, Mark Chalmers, sold CA$202k worth of shares at a price of CA$3.76 per share. So we know that an insider sold shares at around the present share price of CA$3.57. While we don’t usually like to see insider selling, it’s more concerning if the sales take price at a lower price. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive).
We note that in the last year insiders divested 147k shares for a total of CA$552k. In the last year Energy Fuels insiders didn’t buy any company stock. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insiders at Energy Fuels Have Sold Stock Recently
Over the last three months, we’ve seen a bit of insider selling at Energy Fuels. Director Paul Carroll only netted US$43k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn’t bother us.
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data suggests Energy Fuels insiders own 1.7% of the company, worth about CA$5.8m. But they may have an indirect interest through a corporate structure that we haven’t picked up on. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Energy Fuels Insiders?
While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we’re not concerned. Recent sales exacerbate our caution arising from analysis of Energy Fuels insider transactions. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Energy Fuels.
Of course Energy Fuels may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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