Possible Bearish Signals With Paramount Resources Insiders Disposing Stock

Many Paramount Resources Ltd. (TSE:POU) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Paramount Resources

The Executive Vice President of Corporate Development & Planning, Rodrigo Sousa, made the biggest insider sale in the last 12 months. That single transaction was for CA$1.6m worth of shares at a price of CA$32.96 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$17.42. So it may not tell us anything about how insiders feel about the current share price. Notably Rodrigo Sousa was also the biggest buyer, having purchased CA$892k worth of shares.

Over the last year, we can see that insiders have bought 53.49k shares worth CA$892k. But insiders sold 157.38k shares worth CA$5.0m. All up, insiders sold more shares in Paramount Resources 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!

Check out our latest analysis for Paramount Resources

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. Not only was there no selling that we can see, but they collectively bought CA$788k worth of shares. This could be interpreted as suggesting a positive outlook.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Paramount Resources insiders own 1.4% of the company, worth about CA$39m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Paramount Resources Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. 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 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. Case in point: We've spotted 2 warning signs for Paramount Resources you should be aware of.

But note: Paramount Resources 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.