Insiders sitting comfortably on a US$1.2m profit after buying Equinox Gold Corp. (TSE:EQX) stock worth US$4.6m last year

By
Simply Wall St
Published
March 16, 2022
TSX:EQX
Source: Shutterstock

Insiders who purchased Equinox Gold Corp. (TSE:EQX) shares in the past 12 months are unlikely to be deeply impacted by the stock's 4.8% decline over the past week. After taking the recent loss into consideration, the US$4.6m worth of stock they bought is now worth US$5.8m, indicating that their investment yielded a positive return.

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.

View our latest analysis for Equinox Gold

The Last 12 Months Of Insider Transactions At Equinox Gold

Over the last year, we can see that the biggest insider purchase was by Independent Chairman of the Board Ross Beaty for CA$2.0m worth of shares, at about CA$7.81 per share. Even though the purchase was made at a significantly lower price than the recent price (CA$9.56), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Over the last year, we can see that insiders have bought 604.97k shares worth CA$4.6m. On the other hand they divested 109.58k shares, for CA$942k. In total, Equinox Gold insiders bought more than they sold 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
TSX:EQX Insider Trading Volume March 16th 2022

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.

Equinox Gold Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Equinox Gold, over the last three months. In fact, two insiders bought CA$2.1m worth of shares. But we did see insider selling worth CA$887k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Equinox Gold insiders own 8.4% of the company, currently worth about CA$242m 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.

So What Do The Equinox Gold Insider Transactions Indicate?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Equinox Gold insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Equinox Gold (of which 2 are a bit concerning!) you should know about.

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, but not derivative transactions.

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