Possible Bearish Signals With Eldorado Gold Insiders Disposing Stock

The fact that multiple Eldorado Gold Corporation (TSE:ELD) 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Eldorado Gold

Eldorado Gold Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the President, George Burns, sold CA$2.8m worth of shares at a price of CA$15.49 per share. That means that even when the share price was below the current price of CA$20.93, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 20% of George Burns's holding. Notably George Burns was also the biggest buyer, having purchased CA$1.2m worth of shares.

Happily, we note that in the last year insiders paid CA$1.2m for 95.64k shares. But insiders sold 438.16k shares worth CA$7.2m. Over the last year we saw more insider selling of Eldorado Gold shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Eldorado Gold better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Eldorado Gold Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Eldorado Gold. In that time, insiders dumped CA$6.6m worth of shares. On the flip side, insiders spent CA$12k on purchasing shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Eldorado Gold

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Eldorado Gold insiders own about CA$37m worth of shares. That equates to 0.9% of the company. 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 Eldorado Gold Insider Transactions Indicate?

The stark truth for Eldorado Gold is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Eldorado Gold is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! 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 Eldorado Gold you should be aware of.

Of course Eldorado Gold may not be the best stock to buy. So you may wish to see this free collection of high quality 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.