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 before you buy or sell Kirkland Lake Gold Ltd. (TSE:KL), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Kirkland Lake Gold
In the last twelve months, the biggest single sale by an insider was when Non-Executive Chairman Eric Sprott sold CA$9.2m worth of shares at a price of CA$36.00 per share. That means that even when the share price was below the current price of CA$47.54, an insider wanted to cash in some shares. While their view may have changed since they sold, this isn’t a particularly bullish sign. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. We note that the biggest single sale was only 1.3% of Eric Sprott’s holding.
In total, Kirkland Lake Gold insiders sold more than they bought over the last year. The average sell price was around US$35.49. It’s not particularly great to see insiders were selling shares at below recent prices. But we wouldn’t put too much weight on the insider selling. You can see a visual depiction of insider transactions (by 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!
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Kirkland Lake Gold Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Kirkland Lake Gold shares over the last three months. In that time, insiders dumped US$20m worth of shares. Meanwhile Independent Director Jeffrey Parr bought US$99k worth. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
Does Kirkland Lake Gold Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kirkland Lake Gold insiders own 9.7% of the company, currently worth about CA$964m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Kirkland Lake Gold Insiders?
The stark truth for Kirkland Lake 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 since Kirkland Lake Gold is profitable and growing, we’re not too worried by this. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Kirkland Lake Gold.
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We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.