Possible Bearish Signals With Lundin Gold Insiders Disposing Stock

In the last year, many Lundin Gold Inc. (TSE:LUG) insiders sold a substantial stake in the company which may have sparked shareholders' attention. 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Lundin Gold

The Last 12 Months Of Insider Transactions At Lundin Gold

In the last twelve months, the biggest single sale by an insider was when the President, Ronald Hochstein, sold CA$1.7m worth of shares at a price of CA$16.73 per share. That means that even when the share price was below the current price of CA$20.08, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 11% of Ronald Hochstein's holding.

Happily, we note that in the last year insiders paid CA$1.8m for 96.33k shares. On the other hand they divested 345.43k shares, for CA$6.1m. In total, Lundin Gold insiders sold more than they bought over the last year. The average sell price was around US$17.80. 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 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!

I will like Lundin Gold better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Lundin Gold Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Lundin Gold shares over the last three months. In total, insiders sold CA$2.6m worth of shares in that time. On the flip side, Independent Lead Director Charles Ashley Heppenstall spent CA$1.0m on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.8% of Lundin Gold shares, worth about CA$37m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Lundin Gold Tell Us?

The stark truth for Lundin Gold is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Lundin Gold is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Lundin Gold. You'd be interested to know, that we found 2 warning signs for Lundin Gold and we suggest you have a look.

But note: Lundin 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com