Insiders At Paramount Resources Sold CA$5.0m In Stock, Alluding To Potential Weakness

The fact that multiple Paramount Resources Ltd. (TSE:POU) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Paramount Resources

The Last 12 Months Of Insider Transactions At Paramount Resources

In the last twelve months, the biggest single sale by an insider was when the Executive Vice President of Corporate Development & Planning, Rodrigo Sousa, sold CA$1.6m worth of shares at a price of CA$32.96 per share. That means that an insider was selling shares at around the current price of CA$30.21. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

In the last twelve months insiders purchased 3.30k shares for CA$103k. On the other hand they divested 157.38k shares, for CA$5.0m. In total, Paramount Resources insiders sold more than they bought over the last year. 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!

I will like Paramount Resources 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.

Paramount Resources Insiders Bought Stock Recently

It's good to see that Paramount Resources insiders have made notable investments in the company's shares. Specifically, Independent Director Kimberley Lynch Proctor bought CA$94k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership Of Paramount Resources

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Paramount Resources insiders own 1.1% of the company, worth about CA$49m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Paramount Resources Insiders?

It is good to see the recent insider purchase. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Paramount Resources insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Paramount Resources (1 doesn't sit too well with us!) that we believe deserve your full attention.

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 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.