Paramount Resources Insiders Sold CA$6.3m Of Shares Suggesting Hesitancy

Over the past year, many Paramount Resources Ltd. (TSE:POU) insiders sold a significant stake in the company which may have piqued investors' interest. 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, if numerous insiders are selling, shareholders should investigate more.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Paramount Resources

The Last 12 Months Of Insider Transactions At Paramount Resources

Over the last year, we can see that the biggest insider sale was by the Executive Vice President of Corporate Development & Planning, Rodrigo Sousa, for CA$1.6m worth of shares, at about CA$32.96 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of CA$26.57. So it may not shed much light on insider confidence at current levels.

Happily, we note that in the last year insiders paid CA$263k for 9.30k shares. On the other hand they divested 197.38k shares, for CA$6.3m. All up, insiders sold more shares in Paramount Resources than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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 Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Paramount Resources. In that time, insiders dumped CA$437k worth of shares. On the flip side, Independent Director James Geral Bell spent CA$9.2k on purchasing shares. We don't view these transactions as a positive sign.

Insider Ownership Of Paramount Resources

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 1.0% of Paramount Resources shares, worth about CA$39m. 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 Do The Paramount Resources Insider Transactions Indicate?

Unfortunately, there has been more insider selling of Paramount Resources stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 4 warning signs with Paramount Resources and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.