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 shareholders might well want to know whether insiders have been buying or selling shares in Continental Gold Inc. (TSE:CNL).
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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’.
Continental Gold Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director Martín Carrizosa bought CA$383k worth of shares at a price of CA$3.56 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders bought 466.09k shares for a total of CA$1.6m. In the last twelve months there was more buying than selling by Continental Gold insiders. They paid about CA$3.34 on average. These transactions suggest that insiders have considered the current price of CA$2.23 attractive. The chart below shows insider transactions 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!
Continental Gold is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Continental Gold Insiders Bought Stock Recently
It’s good to see that Continental Gold insiders have made notable investments in the company’s shares. Overall, 3 insiders shelled out US$117k for shares in the company — and none sold. This is a positive in our book as it implies some confidence.
Insider Ownership of Continental Gold
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Continental Gold insiders own 1.5% of the company, currently worth about CA$6.0m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Continental Gold Tell Us?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But we don’t feel the same about the fact the company is making losses. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Continental Gold insiders are expecting a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Continental Gold may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 email@example.com.