Possible Bearish Signals With Lundin Gold Insiders Disposing Stock

The fact that multiple Lundin Gold Inc. (TSE:LUG) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At Lundin Gold

The President, Ronald Hochstein, made the biggest insider sale in the last 12 months. That single transaction was for CA$3.7m worth of shares at a price of CA$41.42 each. That means that even when the share price was below the current price of CA$69.98, 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 9.0% of Ronald Hochstein's holding.

Happily, we note that in the last year insiders paid CA$1.9m for 65.24k shares. But they sold 261.62k shares for CA$12m. Over the last year we saw more insider selling of Lundin Gold shares, than buying. The sellers received a price of around US$46.08, on average. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Lundin Gold

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Lundin Gold Insiders Are Selling The Stock

We've seen more insider selling than insider buying at Lundin Gold recently. In total, insiders sold CA$4.9m worth of shares in that time. On the flip side, Independent Lead Director Charles Ashley Heppenstall spent CA$543k on purchasing shares. 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 Lundin Gold Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Lundin Gold insiders own 0.8% of the company, currently worth about CA$148m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Lundin Gold Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Lundin Gold, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Lundin Gold is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Lundin Gold.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.