We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Barrick Gold Corporation (TSE:ABX).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
See our latest analysis for Barrick Gold
Barrick Gold Insider Transactions Over The Last Year
Executive Chairman & Member of International Advisory Board John Thornton made the biggest insider purchase in the last 12 months. That single transaction was for CA$30m worth of shares at a price of CA$14.35 each. Even though the purchase was made at a significantly lower price, we still think insider buying is a positive. The purchase might not be the best indicator of confidence in the current valuation.
Happily, we note that in the last year insiders bought 2.84m shares for a total of CA$42m. Overall, Barrick Gold insiders were net buyers last year. They paid about CA$14.66 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of CA$18.22. You can see the insider transactions over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Barrick Gold Have Bought Stock Recently
It’s good to see that Barrick Gold insiders have made notable investments in the company’s shares. In total, insiders bought US$34m worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
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. Barrick Gold insiders own about CA$78m worth of shares. That equates to 0.5% of the company. While this is strong but not in the top group, when it comes to insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Barrick Gold Insiders?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Barrick Gold stock. Of course, the future is what matters most. So if you are interested in Barrick Gold, you should check out this free report on analyst forecasts for the company.
But note: Barrick Gold 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.